Fed Announces Emergency Rate Cut to Fight Coronavirus Economic Risks

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.

Illegal immigrants allegedly ran multi-million-dollar gift card fraud scheme hitting stores daily across Texas

Gen. Flynn Sends Blistering Request to Trump: ‘We The People Demand Accountability!’

Trump Admin Stands Firm After Jesus-Centric Christmas Messages Spark Media Freak-Out

Trump tears up Obama-era Latin American policy with renewal of Monroe Doctrine

Tennessee officers rescue woman considering jumping from bridge on day after Christmas

Ilhan Omar disclosures show husband’s companies surged in value as Minnesota reels from $9B fraud

Top Female Tennis Player Takes on No. 671 Man in ‘Battle of the Sexes’ – It Wasn’t Even Close

‘America first’: Wyoming Secretary of State Chuck Gray launches House bid

Trump Signals Military Hit First Target Inside Venezuela After Finding Drug Facility: ‘We Knocked That Out’

China surrounds Taiwan with warships, fighter jets in largest military drills on record

Missing 19-year-old Camila Mendoza Olmos believed to be ‘in imminent danger,’ Texas sheriff says

Manhunts across America in 2025: Five cases that left cities, campuses and towns on edge

5 pivotal 2026 Senate races will determine whether Republicans maintain governing trifecta under Trump

FBI Foils New Year’s Eve Terror Plot by ‘Pro-Palestinian’ Group in California: Officials

Trump stress-tests Thune’s Senate majority with record-breaking year

“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.