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.

Nicki Minaj pledges to support Donald Trump again during Michigan Republican campaign rally

El Sayed mocks Rogers’s ‘earpiece’ and Trump’s ‘a**’ remarks in Grand Rapids rally

Sanders calls Michigan Senate race a test of Trump, accuses president of using racism to divide voters

Bruce Blakeman calls Kathy Hochul Zohran Mamdani’s ‘puppet’ during New York campaign rally

College homecoming party turns to chaos as deck collapses, leaving at least 28 people injured

Ninth Circuit questions Trump DOJ’s emergency request to set aside 20,000 California mail ballots

Stolen car slams into South Carolina home as teens bolt, authorities say

Woman busted in NYC rabbi syringe attack allegedly stabbed another Jewish man hours earlier: report

Ilhan Omar Accused of Leaking Info to Foreign Leaders in Somalia as Resurfaced Post Brings Evidence to Light

Airbnb Cracks Down on Hosts Treating Guests Like a Free Maid Service

How Is This Legal? Pollster Boosting Dem in Mississippi Admits It Fabricated Most Election Surveys

MAPPED: The states Trump and top Democrats are targeting before Election Day

Young Voters Who Helped Hand Trump White House Are Flocking Back to Dems for the Midterms: Poll

‘Pay the Community’: Trump Pushes Builders to Give Local Americans Extra Payday to Put Up with Unpopular Data Centers

5 victims released from hospital after Florida A&M University shooting, 1 remains critical

“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.