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.

Humanoid robots could patrol southern border, CEO pitches, as futuristic technology moves closer to reality

Men Are Not Women: Stand Up for the Truth

The only map you need to see as California’s billionaire tax fight heats up

Lexington, Kentucky park shooting kills 1, injures 4 during live band performance

Democrats Want ID for Hot Pockets But Not for Voting?

Last-Ditch Effort to Kill Trump Fossil Fuel EOs Goes Down in Flames

Family killer Chris Watts seeks prison marriage with new love interest: report

Why Did Pollsters Get Michigan And Wisconsin Primaries So Wrong?

Jon Ossoff, Georgia’s first Jewish senator, faces angry Jewish voters

Trump’s men at the United Nations

Swing-state’s fraud reckoning raises Minnesota-style alarm as wild schemes exposed

Mundane DOJ Memo on Post Office Gun Bans Is Actually Bigger Deal Than You Think

ICE bought nonlethal shock gloves for officers. Democrats still are not pleased

Americans clash over transgender athletes as debate heats up: ‘Just getting outrageous’

Routine California traffic stop leads to seizure of 30 pounds of cocaine worth more than $800K

“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.