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.

Ex-NFL linebacker poised to return to Congress after Texas runoff win with Jasmine Crockett endorsement

Trump-backed Air Force veteran wins GOP runoff in newly-redistricted House district

U.S. military kills alleged narco-terrorist in lethal strike on drug-trafficking vessel in Eastern Pacific

Texas Railroad Commissioner Jim Wright and wife share story of 2017 crash that left her permanently paralyzed

Breaking: Longtime Democrat Rep. Al Green Has Been Defeated, Will Lose His Seat in Congress

BREAKING: Ken Paxton Has Defeated John Cornyn in the TX GOP Senate Primary

GOP veteran defeats populist candidate in one of America’s most conservative districts

MAGA triumph: Trump ally Ken Paxton defeats John Cornyn in bitter Texas GOP primary war

We Could Cover 10 Percent of the Entire Deficit if Gov’t Stopped Accidentally Making Improper Payments

Owner of Trump House Who Was Brutally Beaten Has Died – Wife Believes Politics Motivated Murder

Reparations-Backing California Candidate Run Out of Black LA Neighborhood Over His ‘Devil Blue Eyes’

Murder-suicide probe underway after alleged Tom Selleck impersonator scam targeted woman

Mamdani faces a Muslim problem ahead of Gracie Mansion protest

DOJ sues UCLA for fostering ‘hostile’ antisemitic environment for Jewish and Israeli students

Thom Tillis Unloads on Hegseth, Ken Paxton in Weekend Tantrum as GOP’s Establishment Wing Faces Extinction

“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.