As the coronavirus bore down on the United States in February and President Donald Trump renewed his public call for interest rate cuts, he and Federal Reserve Chair Jerome Powell conducted two previously undisclosed phone calls, calendars released by the U.S. central bank on Friday show.
Trump and Powell spoke for a half hour on Feb. 7 and again briefly on Feb. 26. What exactly they discussed was not immediately clear, but Powell released a statement on Feb. 28 acknowledging evolving risks from the virus and promising the central bank would act as appropriate to support the economy.
It delivered an emergency rate cut on March 3.
Expectations for a Fed rate cut had risen dramatically during the month, even as most Fed policymakers were fairly sanguine about the threat of the coronavirus to the U.S. economy. Powell told lawmakers in mid-February testimony that while there was "no reason" the U.S. economic expansion could not continue, the coronavirus outbreak in China could slow things down over the short-term.
Investors had already begun to see if differently. The yield on the U.S. benchmark 10-year Treasury lost ground over the month, and when Trump and Powell talked for the second time, the S&P 500 Index was in day three of a sharp descent that continued through March.
Powell's calendars show the Fed chair spoke with many of his global counterparts over the course of February, including with China's central bank chief Yi Gang on Feb. 5, shortly after Trump closed U.S. borders to Chinese travelers in an effort to keep the coronavirus from gaining a foothold in the United States. He normally speaks frequently with other central bankers.
Less typical for a February was the flurry of calls with his fellow Fed policymakers the evening before and immediately after his regular weekly breakfast meeting with Treasury Secretary Steven Mnuchin on Feb. 28. He had spoken with many of his colleagues and a couple global counterparts by 2:30 p.m., when the Fed released his statement about the risks from COVID-19 and the pledge to act "as appropriate."
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