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Fed Cuts Rates by 50 BPs; Cites “Evolving Risks” of Coronavirus
Citing “evolving risks” posed by the coronavirus, the Federal Reserve is lowering the target range for the federal funds rate by 50 basis points. The Federal Open Market Committee on Tuesday cut the target range to between 1% and 1.25%.
“The fundamentals of the U.S. economy remain strong,” according to a statement from the Fed. “However, the coronavirus poses evolving risks to economic activity.”
The nation’s central bank took this step “in support of achieving its maximum employment and price stability goals.” The FOMC 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 statement said.
Voting for the cut were Fed chair Jerome H. Powell, vice chair John C. Williams and governors Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarle.
Following the Fed’s announcement, the Dow Jones index dropped by 733 points early Tuesday, while the S&P 500 and Nasdaq indexes slid 2%. Conversely, the price of 10-year Treasuries surged, pushing yields below 1%, reportedly the first time this has occurred.
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- ◦Economy
