Chairman Powell Cuts Rates Half A Percentage

Chairman Powell

The Federal Reserve cut interest rates by half a percentage point following an unscheduled meeting Tuesday, an emergency move designed to bolster the U.S. economy against the rapidly spreading coronavirus that’s roiled financial markets. 

The Federal Open Market Committee (FOMC) lowered its target range for the federal funds rate to 1-1.25 percent. It’s the first emergency move since October 2008, when the U.S. economy was in the midst of its worst crisis since the Great Depression. 
Fed Chairman Jerome Powell told journalists in a press conference that risks to the U.S. outlook have changed “materially” and the coronavirus will impact activity “for some time,” even as he cautioned that the U.S. economy’s fundamentals remain strong.

 The outbreak has disrupted economic activity in many countries and prompted significant movements in financial markets,” Powell said.
The rate cut, a unanimous decision, comes less than two weeks before the Fed’s next regularly scheduled meeting, a two-day session that concludes on March 18. Market participants think the Fed will cut rates again at that gathering, according to CME Group’s FedWatch tool.

“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity,” the FOMC said in a statement, released Tuesday in Washington. “The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.”
The Fed’s reduction comes on the heel of unprecedented pressure from the Oval Office, with President Donald Trump urging officials to reduce rates in light of the coronavirus fallout as he touts the record-long expansion during his reelection bid.
Nearly an hour after the Fed made its emergency move, the chief executive tweeted that the Fed should enact more stimulus.