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.

Trump to award Medal of Freedom to former pitcher Roger Clemens

Ken Paxton calls out James Talarico’s 11-day absence at Trump rally, prompting response from campaign

Trump heckled multiple times at Texas rally for Ken Paxton, blames ‘paid protesters’

FIRST ON FOX: US Coast Guard recruits largest class in nearly 40 years, beats goals for third straight year

Zach Bryan’s ‘Free Palestine’ Shirt Also Contained a Second Message – It Doesn’t Help His Case

GOP Senate hopeful sounds alarm after alleged Mall of America terror plot thwarted

Manning: Let’s Talk About Mamdani Defending Hamas on Oct. 7 and Exactly What They Did to Their Female Victims

House Democratic candidate denies illegal immigrant arrested by ICE works for campaign

Driver opens fire on strangers along major US interstate, tells cops he ‘had to kill people today’

DHS proposes massive $70K fee for foreign students seeking work authorization

Anti-Israel groups rally across US on October 7 anniversary, chanting ‘long live the intifada’

Judge weighs bid to dismiss soldier’s case over Polymarket bets tied to Maduro raid

Mom dies shielding baby in horrific 15-story Bronx fall as police hunt suspect: report

Christa Pike’s first words revealed after she unexpectedly woke up while lawyers thought she was ‘brain dead’

Watch: Pastor Fights Back as City Council Begins Meeting with Prayer to Satan

“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.