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.

Rescue expert warns FlyDubai hijacking attempt shows US, allies are ‘playing checkers’ against terror threat

WATCH: CDC director discusses US government response to Russian plague concerns: ‘We are protected’

T-Mobile, AT&T Share Prices Plummet as Musk Makes Move to Shake Up the Industry

Disturbing Hunger-Killing AI ‘Yum Slop’ Trend Sweeps Through Restaurant Industry

Minnesota GOP chair blasts progressive group over KKK-themed sign shown during Black House speaker’s remarks

NYC councilwoman blasts Mamdani over Italian Heritage Month post praising ‘communist’

Poland’s police warn of a possible plot to attack Prime Minister Donald Tusk

‘LONG Overdue’: Trump Calls for Ukraine to Oust Zelenskyy

NYPD detective gives update on condition after illegal immigrant duo allegedly stabbed him 7 times

Watch: El-Sayed Still Can’t Condemn Dead Ayatollah Khamenei, Man Who Killed and Oppressed His Own People

Wage growth lags inflation, making the affordability crisis feel even more acute

China is in bed with the world’s worst regimes

A new biography revisits ‘No Country for Old Men’ author Cormac McCarthy

Hero deputy rescues wheelchair-bound grandfather who fell into shark-infested waterway

Flock executive defends crime-fighting cameras as ACLU attorney questions company’s motives amid backlash

“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.