Fed makes emergency rate cut by half a percentage point to combat coronavirus

U.S. Federal Reserve announced on Tuesday an emergency rate cut of half a percentage point amid the growing economic impact concerns from the coronavirus outbreak.

This move is the first kind of cut since December 2008 at the time of the financial crises.

The Fed said in a statement: “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.”

Chairman Jerome Powell said at a news conference later that the Fed took action after officials saw the coronavirus was having a material impact on the economic outlook, CNBC reported.

“The magnitude and persistence of the overall effect on the U.S. economy remain highly uncertain and the situation remains a fluid one,” CNBC quoted Powell as saying.

“Against this background, the committee judged that the risks to the U.S. outlook have changed materially. In response, we have eased the stance of monetary policy to provide some more support to the economy.” he added.

However, U.S. President Donald Trump said in a tweet that the cut was not enough, while Treasury Secretary Steven Mnuchin said: “I applaud the Fed on this move.”