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.

Harris-backed Democrat scrubs BLM-era posts as House campaign heats up

America’s favorite beers — and the jobs tied to them — are at the center of a brewing trade fight

Florida toddler dies after father realizes child was left in SUV during daycare pickup

Thousands of beer cans spill across Connecticut highway after tractor-trailer overturns

Socialism goes west as DSA-backed challenger ousts longtime Democrat

DOJ says 11 migrants indicted in multi-state sex trafficking, drug, firearms case

Anti-Trump senator defeated by far-left rival after heated gubernatorial primary

Ex-talk show host will take on former chief advisor to Kamala Harris’ husband

Mamdani comparisons follow Colorado Democrat into pivotal House race after primary win

Detroit City Council narrowly votes to renew ShotSpotter gunshot detection contract despite opposition

Ketanji Brown Jackson Called an ‘Embarrassment’ for Using Social Media Slang in Birthright Citizenship Opinion

Federal judge blocks blue state’s law prohibiting ICE agents from wearing masks on the job

China-Based Tech Mogul Who Funds US Communist Groups in Grand Jury Crosshairs: Report

Watch: Taylor Swift Gets Hostile Reaction from Country Music Fans During Surprise Appearance

Republican Party to host historic midterm convention in Dallas, Trump announces on Truth Social

“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.