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.

UN nuclear watchdog says Iran nuclear site damaged in strikes

Justice Department’s new policy saves $1.6 million in taxpayer dollars previously spent on transgender procedures

Supreme Court blocks California ban on notifying students’ parents about gender transitions

Cornyn wants to work with Trump to fix ‘broken’ immigration system if reelected

BREAKING: US Embassy in Riyadh, Saudi Arabia Hit by Multiple Iranian Drones

Markets Handle Iran Strikes Brilliantly as S&P 500 Has Biggest Intraday Recovery in 5 Months Finishing Positive for the Day

Trump sends official notification to Congress on strikes against Iran

Virginia Mom Allegedly Murdered by Illegal Alien with 30 Priors Only Weeks After Dem Governor Blocks ICE Cooperation

Department of Education Honors Charlie Kirk with Banner as Part of America’s 250th Birthday Celebration: ‘Heroes in American Education’

Watch: Responding to an ABC Reporter, Trump Just Issued the Coolest Wartime Quote in Presidential History – It’ll Never Be Topped

Iran Update: Trump Says Attack Is Moving Much Faster Than Expected With 1,200 Targets Hit and the Entire Iranian Navy Neutralized

Musk, xAI tout newest Grok update as only ‘non-woke’ platform: ‘Doesn’t equivocate”

Trump admin warned lawmakers Israel was ‘determined to act with or without us’ before massive Iran strikes

Tarot influencer’s claims in Idaho college murders case spark courtroom reckoning

New Jersey-bound United flight makes emergency landing at LAX after engine fire

“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.