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.

Prince William Plans to ‘Slash and Burn’ Royal Establishment, Harry and Meghan: Report

Ex-CNN Anchor Who Quit News Industry Under Cloud of Controversy Is Now Dead

Americans want US to lead globally but doubt military can win major wars overseas, survey finds

The Tennessee ‘waltz’: Republicans and Democrats dance around meaning of special election results

House Oversight Committee launches investigation into Walz over alleged Somali fraud

‘Home Improvement’ Star Arrested for 6th Time in 5 Years After Narrowly Avoiding Being Run Over by Fiancée: Police

House Democrats release ‘never-before-seen’ photos and videos of Epstein’s private island

Kevin Costner Set to Tell the True Story of Christmas in ABC Special ‘That Was Unthinkable Even a Couple of Years Ago’

National Guard killing reignites immigration war in Congress as Republicans demand sweeping reforms

Miami mayoral candidate reveals how he will flip script on Dem rival’s ‘city of renters’ strategy

University of Delaware student allegedly mapped out attack on campus police; illegal weapons recovered

Rand Paul Puts Aside Differences, Sends Trump a Personal Message Seeking to Partner on Key Proposal

Ben Stiller’s Attempt to Defend Somalis from Trump Backfires as Social Media Users Offer a Suggestion

Pentagon probe into secret Signal chats on Houthi strikes set to drop Thursday as Hegseth faces scrutiny

WATCH: Three Florida teenagers arrested in viral ‘door kick challenge’ targeting homeowners

“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.