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.
NYU attack suspect allegedly assaulted woman days earlier, found burglarizing off-campus apartments: report
NYC teen arrested, charged with setting homeless subway rider on fire, police say
Alberta Pastor Arrested for Refusing to Apologize for Hurting Woke Librarian’s Feelings
Huge DC Pipe Bomb Twist Changes the Story – The Biden Admin Knew
Trump hosts ‘Washington Accords’ Rwanda-Congo peace deal signing, vows US rare earths purchases
Young Americans give big thumbs down to Democrats, Republicans, Trump: poll
Trump ‘most important president in maybe 100 years’
US announces ‘reconsideration’ of ties with Tanzania amid ‘disturbing violence against civilians’
PhRMA started cutting them checks, then they started attacking its enemies
Samaritan’s Purse Plane Hijacked While on Aid Mission
WATCH: Dem lawmaker thanks Trump for pardon, says it came as a surprise amid re-election bid
Watch: Jake Tapper Masterfully Takes Down Dems, Critics Accusing Trump of Sleeping During Meeting
State Department announces renaming USIP ‘Donald J. Trump Institute of Peace’
PA school faces fury after Muslim club’s pro-Palestinian display leaves Jewish students ‘shaken’
Haitian gang leader learns sentence for orchestrating kidnapping of 16 American missionaries
“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.
NYU attack suspect allegedly assaulted woman days earlier, found burglarizing off-campus apartments: report
NYC teen arrested, charged with setting homeless subway rider on fire, police say
Alberta Pastor Arrested for Refusing to Apologize for Hurting Woke Librarian’s Feelings
Huge DC Pipe Bomb Twist Changes the Story – The Biden Admin Knew
Trump hosts ‘Washington Accords’ Rwanda-Congo peace deal signing, vows US rare earths purchases
Young Americans give big thumbs down to Democrats, Republicans, Trump: poll
Trump ‘most important president in maybe 100 years’
US announces ‘reconsideration’ of ties with Tanzania amid ‘disturbing violence against civilians’
PhRMA started cutting them checks, then they started attacking its enemies
Samaritan’s Purse Plane Hijacked While on Aid Mission
WATCH: Dem lawmaker thanks Trump for pardon, says it came as a surprise amid re-election bid
Watch: Jake Tapper Masterfully Takes Down Dems, Critics Accusing Trump of Sleeping During Meeting
State Department announces renaming USIP ‘Donald J. Trump Institute of Peace’
PA school faces fury after Muslim club’s pro-Palestinian display leaves Jewish students ‘shaken’
Haitian gang leader learns sentence for orchestrating kidnapping of 16 American missionaries
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.
