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.

Two-party politics ‘dead and buried’ in UK after local election bloodbath

Trump throws his base a UFO bone, but critics say it’s Iran ‘smoke and mirrors’

Democrats shy away from questions on whether Harris should run for president in 2028

Two ‘dangerous’ inmates escape Kentucky detention center, sparking multi-agency manhunt across region

Newsom’s ‘Golden State Start’ promises 400 free diapers per baby as California grapples with budget woes

U.S. military kills two alleged narco-terrorists in lethal strike on drug vessel in Eastern Pacific

Reckoning: Islamic Group with Terror Ties Set to Be Investigated by GOP

Trump Preparing to Fire FDA Commissioner Amid Nicotine Dispute and Pro-Life Outcry: Report

Video shows ICE officers arrest alleged MS-13 gang member described as ‘known suspected terrorist’ in Florida

Lawmaker Slaps Phone Out of Reporter’s Hand During Skirmish Over Data Center Story

16-year-old NC girl charged in triple murder of family members; arrested in Tennessee with 28-year-old man

Green Politician Wants to Limit Nursing Home Residents to 2.8 Oz of Meat per Week Due to Climate Change – That’s Less Than 1 Big Mac … Per Week

Obama Slammed for ‘Disgusting’ Decision to Speak at Event Organized by Man with Troubling Past

Did You Catch It? Trump’s Nat’l Day of Prayer Message Said Something Vital That No Other Day of Prayer Message Ever Said

Breaking: Russia, Ukraine Agree to Trump’s Ceasefire Request as He Pushes for a ‘Beginning of the End’

“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.