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.

Trump Sets Record with New Poll: More Loved By His Own Party Than Any President at This Point

Video shows NYPD tackling man who allegedly threw ‘ignited device’ near NYC mayor’s home during protest clash

Trump says US, Israel shattered Iranian military capabilities, presses leaders to surrender: ‘Cry uncle’

Armed Officers Rushed Onboard Flight Forced to Land with Guns Drawn After ‘Security Scare’

Flashback: 11 Years Ago Marco Rubio Correctly Predicted How Obama’s Iran Move Would Backfire

Iran still striking Gulf States despite president’s promise not to: Report

Trump tells Starmer aircraft carriers no longer needed in Mideast, accuses him of joining war US ‘already won’

Arizona governor vetoes Charlie Kirk memorial license plate sparking GOP outrage: ‘This bill falls short’

NYC Mayor Mamdani’s wife liked social media post calling Oct 7 sexual violence investigation a ‘hoax’: report

Noem thanks Trump for new Shield of the Americas special envoy role after DHS ouster

Trump and first lady attend dignified transfer for 6 US troops killed in Kuwait

Supreme Court Will Hear Lawsuit Over Blaming Oil Companies for Climate Change

White House’s bombastic Iran war media blitz breaks from precedent, shocking critics

Farage slams British prime minister for ‘extraordinary’ lack of support for Trump’s Iran strikes

‘Smarter Than Most of You!’: Biden Launches Bizarre Defense of His Stuttering at Jesse Jackson Memorial Service

“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.