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.

Breaking: White House Celebrates as Inflation Numbers Come In ‘Better Than Anyone Was Expecting’

Photo: The Last Line of Bill Clinton’s Plaque in the WH Presidential Walk of Fame Is Priceless – Nobody Tell Hillary

Texas Republicans launch ‘Sharia Free America Caucus’ aimed at defending ‘Western civilization’

Turning Point USA holds AmericaFest conference following Charlie Kirk assassination

Brian Walshe to be sentenced for murdering, dismembering wife who disappeared on New Year’s Day 2023

Is the Providence Police Chief Dirty? Alarming Details on Massive Drug Operation and His Family Are Coming to Light

Fox News ‘Antisemitism Exposed’ Newsletter: Australia pays price for coddling extremists

Trump tries to turn economy back on Democrats in preview of 2026 campaign

Millions in possibly illegal contributions have flooded politics this year

Vatican confirms resignation of Cardinal Timothy Dolan, announces new archbishop of New York

Dan Bongino replies to Kash Patel’s praise following departure announcement: ‘honor of a lifetime’

Beijing bares teeth over Panama Canal as US operations further threaten China’s hold in region

Turning Point Hands Off Charlie Kirk’s Radio Time Slot to Scott Jennings

House approves MTG-sponsored bill to criminalize gender transition treatment for minors

Trump sends troops $1,776 bonus checks, and Biden coal, in Christmas speech to nation

“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.