Economic Flash

Continued Escalation of COVID-19 Outbreak Yields Uncertain Outlook


by Craig Dismuke, Dudley Carter

The news regarding the coronavirus outbreak and the expected economic implications has deteriorated further since our last forecast revision.  Additionally, the collapse of oil prices is expected to have a negative effect on some regions of the country, and has added to risks for the credit markets.  At the time of our last revision, we expected the Fed to cut another 50 basis points but believed they would be able to wait until April to do so.  Given the recent developments, we now expect the Fed to cut 50 basis points at, or before, their scheduled March 18 meeting.  Additionally, the likelihood of the Fed cutting to zero has now increased meaningfully.



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