The Federal Reserve announced an emergency interest rate cut Tuesday, saying it was slashing its benchmark target by half a percentage point to combat the risks by the global outbreak of the coronavirus.
This was the largest move in interest rates since the Fed cut rates during the financial crisis and the first emergency cut since late 2008. Typically, the rate target only moves its rate target at scheduled meetings. The next meeting is set to begin in two weeks.
“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4 percent,” the Fed said in a statement.
In a press conference held after the announcement, Fed chair Jerome Powell said outbreak had disrupted economic activity in many countries and led to “significant movements” in financial markets.
First lady Melania Trump decorates the White House for Christmas: ‘Home is Where the Heart Is’
Trump says he believes Hegseth ‘100%’ on Venezuelan drug boat strike denial amid allegations
Afghan suspect in National Guard attack was ‘radicalized’ after arriving to US, Noem says
Trump says ‘don’t read anything into it’ when asked about declaring Venezuela’s airspace closed
Trump downplays Venezuelan airspace ‘closure’ after Maduro phone call
Trump envoy Steve Witkoff heads to Moscow as Ukraine peace talks gain momentum
Over Half of Childless Women Do Not Want to Become Moms
Advocate warned Afghan evacuee was ‘not functional as a person’ months before National Guard shooting
Trump makes 11th-hour plea for Matt Van Epps over Aftyn Behn, whom he claims ‘hates Christianity’
Pope Leo says two-state solution ‘only solution’ to Israel-Palestine conflict
China Arrests 18 Church Leaders Amid Crackdown on Christianity
One of the Oldest Copies of Scripture Coming to the US
Sen Cory Booker marries fiancé Alexis Lewis in intimate DC ceremony
Ahead of ICE ops, New Orleans police leader lambasted for comments about enforcement of immigration law
Electricity Bills to Skyrocket This Holiday Season: Here’s Why
“The virus and the measures being taken to contain it will surely weigh on economic activity both here and abroad for some time,” Powell said.
The rate cut comes after ten days or so of mounting concerns over the coronavirus roiling financial markets. President Donald Trump has urged the Fed to take action a number of times over the past week, arguing that the central bank had to deploy a more accommodative monetary policy to deal with the economic risks because Democrats in Congress were unlikely to vote for a tax cut to stimulate growth.
Powell denied that pressure from the president had played any role in the decision to cut rates, saying the Fed had only taken into account its analysis of the economic situation in light of its mandate to foster price stability and maximum employment.
“We’re never going to consider any political considerations whatsoever. We will not do that and it’s very important that the public understand that,” Powell said.
Financial markets themselves have pressured the Fed, pushing longer-term interest rates to record lows and fed funds futures prices to reflect what amounted to a demand by investors that the Fed move off its previous “wait and see” stance.
The first U.S. deaths from the coronavirus were reported Saturday. At the time of the Fed announcement Wednesday, the death toll had climbed to 6. Some have argued that the health impacts in the U.S. are unlikely to be large and described the coronavirus as likely to be similar to a “very bad flu season.” Powell pointed out that the economic toll could still be significant.
“For us what really matters is not the epidemiology but the risks to the economy. So we saw the risks to the economy and chose to act,” Powell explains.
First lady Melania Trump decorates the White House for Christmas: ‘Home is Where the Heart Is’
Trump says he believes Hegseth ‘100%’ on Venezuelan drug boat strike denial amid allegations
Afghan suspect in National Guard attack was ‘radicalized’ after arriving to US, Noem says
Trump says ‘don’t read anything into it’ when asked about declaring Venezuela’s airspace closed
Trump downplays Venezuelan airspace ‘closure’ after Maduro phone call
Trump envoy Steve Witkoff heads to Moscow as Ukraine peace talks gain momentum
Over Half of Childless Women Do Not Want to Become Moms
Advocate warned Afghan evacuee was ‘not functional as a person’ months before National Guard shooting
Trump makes 11th-hour plea for Matt Van Epps over Aftyn Behn, whom he claims ‘hates Christianity’
Pope Leo says two-state solution ‘only solution’ to Israel-Palestine conflict
China Arrests 18 Church Leaders Amid Crackdown on Christianity
One of the Oldest Copies of Scripture Coming to the US
Sen Cory Booker marries fiancé Alexis Lewis in intimate DC ceremony
Ahead of ICE ops, New Orleans police leader lambasted for comments about enforcement of immigration law
Electricity Bills to Skyrocket This Holiday Season: Here’s Why
In his press conference, Powell said that the central bank was already seeing the effects in the travel and tourism industries and had heard concerns from businesses that rely on global supply chains. It is still too early to know how large or how long the impact on the U.S. economy will be, Powell said.
Trump responded to the cut with a call for the Fed to do more.
The Federal Reserve is cutting but must further ease and, most importantly, come into line with other countries/competitors. We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!
— Donald J. Trump (@realDonaldTrump) March 3, 2020
story cited here.
