Former U.S. Federal Reserve governor ​Kevin Warsh is making the case for the U.S. central bank to lead coordinated interest rate cuts in order to support the global economy amid the rapid spread of coronavirus.

“In a coordinated move alongside the People’s Bank of China, the European Central Bank, and the Bank of England, the Bank of Japan and others so willing, the Fed should announce a 0.25-percentage-point interest rate cut and make clear it’s open-minded about further action,” Walsh wrote in an opinion piece in the Wall Street Journal Wednesday.

Markets are pricing in a 50-per-cent chance the Fed will in fact cut rates when it makes its next decision March 18.

“I think [the Fed] has a whole bunch of reasons why they can afford to cut,” Nathan Thooft,  head of Global Asset Allocation at Manulife Investment Management, said on BNN Bloomberg Thursday.  “One, the market has priced it in, and two, two there aren’t any inflation concerns. Three, there is global weakness when it comes to growth dynamics.”

“If the Fed cuts, I do think you’ll see other central banks follow through as well,” he added. “Will [the Fed] cut as an emergency outside of their meeting schedule? I’m a little more questionable on that one.”  

Walsh also said the Fed should encourage other central banks to “take appropriate simultaneous action to loosen monetary policy in their jurisdictions.”

“Global action would help make the most of scarce policy ammunition,” he wrote.

In Canada, the Bank of Canada has bucked the global rate-cutting trend by maintaining its key interest rate at 1.75 per cent since October 2018.  The market is pricing in a 32-per-cent chance of a rate cut at its meeting next week.