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.

WATCH: Young bear takes rough tumble from Denver tree after wildlife officers tranquilize it

The Green New Deal Is Back: Its Next Target – AI

American Airlines flight lands safely after laptop battery catches fire on board; passenger injured

Jury Slaps Down Burglar’s $10M Suit Against Urine-Tossing Business Owner Who Shot Him

El-Sayed under fire online after taking aim at Usha Vance, female Trump aide in weekend social media posts

Karoline Leavitt reveals next role after leaving White House press secretary post

Alaska Republicans scramble to educate voters on suspected Dem plant as ‘ballot fatigue’ threatens race

Virginia Dem admits system ‘failure’ after illegal immigrant accused in landlord killing escapes to Tajikistan

Ford Adds Thousands of Jobs in United States as Move Away from China Continues

NYC taxpayers could pay twice under Mamdani’s city-owned grocery store plan

Report: Meghan and Harry’s Brazen Attempts – and Embarrassing Rejections – at Becoming US Political Operators

Nevada brush fire spreads to 10,500 acres as governor declares state of emergency

Christian Club Files Lawsuit After School District Blocks Volunteer Mentors

White House revs up ‘iconic’ Freedom 250 race as IndyCars prepare to unleash American muscle on DC streets

African Witchcraft, Blackmail, and American Boys: How Nigerians 6,000 Miles Away Are Killing US Teens

“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.