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.

Border Patrol arrests two illegal aliens convicted of child sex offenses near San Diego in back-to-back busts

Trump opens Hormuz under fire with ‘Project Freedom’ as Iran warns of attacks

Arkansas school director sentenced for being ‘ringleader’ of child fight club

Civil rights groups file lawsuit seeking to block Texas law allowing cops to arrest illegal migrants

Rudy Giuliani’s primary care provider gives update on his condition

Police dog follows his nose to find missing autistic teen screaming for help

Ohio daycare worker convicted of horrific physical abuse of toddlers sentenced to years in prison

Alert: Child Struck by Gunfire as Secret Service Neutralizes Alleged Gunman Near White House

Military-trained fugitive accused of shooting wife eludes manhunt in rural woodlands

Staffer for Dem Sen. Cory Booker Who Brought Gun Into Capitol Without a License Saw Charges Quickly Dropped: DOJ

Video shows Dem candidate dodging Trump violence question as campaign issues response

Florida GOP candidate reveals why ‘amazing’ fundraising haul and key Trump moves suggest midterm ‘optimism’

GOP challenger Joe Kaufman to run in Florida’s 25th district; will face either Moskowitz or Wasserman Schultz

Trump’s troop drawdown jolts Europe as NATO chief says leaders got the ‘message’

NATO Chief Says European Leaders Have Finally ‘Gotten the Message’ from Trump and Are Changing Their Ways

“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.