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.

Jasmine Crockett’s social media posts about WHCD shooting show different tones

Mentalist Oz Pearlman to skip Kimmel appearance after Trump dinner shooting

Wisconsin teacher placed on leave after social media post advocating to ‘make Americans great assassins again’

Mamdani and King Charles to attend 9/11 ceremony in New York City: What to know

After Karoline Leavitt Calls Out Dems for Their Vile Anti-Trump Rhetoric, GOP Brings the Receipts

Newsom’s wife lashes out at Trump after he rips ’60 Minutes’ host: ‘Internalized misogyny’

Mamdani’s education plan’s ‘lack of merit’ could fundamentally change student outcomes: GOP leader warns

‘Hell Week’ in Washington: A look at House Republicans’ current bind, and how we got here

DOJ Moves Against White House Ballroom Lawsuit in Wake of Shooting: ‘Enough Is Enough’

Pastor known for marriage advice arrested at rumored swingers community accused of having multiple wives

Newsom taunts Trump with multiple jabs as Florida redistricting fight ramps up: ‘Beat at his own game’

Watch: Bubba Wallace Sparks NASCAR Mega-Crash That Sweeps Up the Majority of the Field

Injured Secret Service agent fired five shots at Cole during Trump assassination attempt

Trump Calls for Jimmy Kimmel to Be ‘Immediately Fired by ABC and Disney’ After ‘Beyond the Pale’ Melania Stunt

Charles goes to Washington: King visits Trump with ‘special relationship’ at a low

“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.