The Federal Reserve Bank of New York president, John C. Williams, made clear on Thursday evening that officials viewed the emergency rate cut they approved earlier this week as part of an international push to cushion the economy as the coronavirus threatens global growth.
Mr. Williams, one of the Fed’s three key leaders, spoke in New York two days after the Fed slashed borrowing costs by half a point in its first emergency move since the depths of the 2008 financial crisis. The move came shortly after a call between finance ministers and central bankers from the Group of 7, which also includes Britain, Canada, France, Germany, Italy and Japan.
“Tuesday’s phone call between G7 finance ministers and central bank governors, the subsequent statement, and policy actions by central banks are clear indications of the close alignment at the international level,” Mr. Williams said in a speech to the Foreign Policy Association.
Rate cuts followed in Canada, Asia and the Middle East on Wednesday. The Bank of Japan and European Central Bank — which already have interest rates set below zero — have yet to further cut borrowing costs, but they have pledged to support their economies.
Mr. Williams’s statement is significant, in part because global policymakers were criticized for failing to satisfy market expectations for a coordinated rate cut among major economies. Stock prices temporarily rallied after the Fed’s announcement, but quickly sank again.
Central banks face challenges in offsetting the economic shock of the coronavirus.
Many were already working hard to stoke stronger economic growth, so they have limited room for further action. That makes the kind of carefully orchestrated, lock step rate cut central banks undertook in October 2008 all but impossible.
Interest rate cuts can also do little to soften the near-term hit from the virus, which is forcing the closure of offices and worker quarantines and delaying shipments of goods as infections spread across the globe.
“It’s up to individual countries, individual fiscal policies and individual central banks to do what they were going to do,” Fed Chair Jerome H. Powell said after the cut, noting that different nations had “different situations.”
Mr. Williams reiterated Mr. Powell’s pledge that the Fed would continue monitoring risks in the “weeks and months” ahead. Economists widely expect another quarter-point rate cut at the Fed’s March 18 meeting.
The New York Fed president, whose reserve bank is partly responsible for ensuring financial markets are functioning properly, also promised that the Fed stood ready to act as needed to make sure that everything is working smoothly.
Since September, when an obscure but crucial corner of money markets experienced unusual volatility, the Fed has been temporarily intervening in the market to keep it calm. The goal is to keep cash flowing in the market for overnight and short-term loans between banks and other financial institutions. The central bank has also been buying short-term government debt.
“We remain flexible and ready to make adjustments to our operations as needed to ensure that monetary policy is effectively implemented and transmitted to financial markets and the broader economy,” Mr. Williams said Thursday.