The Federal Reserve Bank on Tuesday lowered the benchmark interest by half a percentage point amid growing concerns of the economic impact of the coronavirus.
The Federal Reserve offered this statement:
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 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.FOMC statement. 03/03/2020.
The Washington Post explains that Tuesday’s emergency rate cut is the biggest cut since 2008’s financial crisis. The rate cut puts U.S. interest rates just below 1.25 percent down from 1.75 percent.
Global economic leaders said Tuesday morning that they were “ready to take action,” to stabilize the global economy from the threat of the coronvirus.
The emergency move comes as Wall Street suffered heavy losses last week, but gained almost 1,100 points on Monday.
Stocks rose sharply at the close after a volatile day of trading. The Dow gained more than 1,100 points, or 5%, and the S&P 500 and Nasdaq both rose more than 4%. https://t.co/9N2VoIP60P pic.twitter.com/9AnT5qMjEi— CNBC (@CNBC) March 2, 2020
The move by the Federal Reserve is likely to raise questions as to whether or not the central bank felt pressure from President Trump aka President Impeached to act quickly, given the President attacked Federal Reserve Chairman Jerome Powell, 4 times on Twitter between Monday and early Tuesday morning.
As usual, Jay Powell and the Federal Reserve are slow to act. Germany and others are pumping money into their economies. Other Central Banks are much more aggressive. The U.S. should have, for all of the right reasons, the lowest Rate. We don’t, putting us at a…..— Donald J. Trump (@realDonaldTrump) March 2, 2020
….competitive disadvantage. We should be leading, not following!— Donald J. Trump (@realDonaldTrump) March 2, 2020
Australia’s Central Bank cut interest rates and stated it will most likely further ease in order to make up for China’s Coronavirus situation and slowdown. They reduced to 0.5%, a record low. Other countries are doing the same thing, if not more so. Our Federal Reserve has us….— Donald J. Trump (@realDonaldTrump) March 3, 2020
….paying higher rates than many others, when we should be paying less. Tough on our exporters and puts the USA at a competitive disadvantage. Must be the other way around. Should ease and cut rate big. Jerome Powell led Federal Reserve has called it wrong from day one. Sad!— Donald J. Trump (@realDonaldTrump) March 3, 2020
President Impeached reacted to the cut via Twitter calling for further cuts and more “easing.”
The Federal Reserve is cuting but must further ease and, most importantly, come into line with other countries/competitors. We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!— Donald J. Trump (@realDonaldTrump) March 3, 2020
President Impeached deleted the above tweet only to reissue the same tweet.
The Federal Reserve is cutting but must further ease and, most importantly, come into line with other countries/competitors. We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!— Donald J. Trump (@realDonaldTrump) March 3, 2020
Shortly after the announcement the stock market dipped into negative territory.
Dow industrials return to negative territory just 15 minutes after Fed surprise https://t.co/BIrFv83uew— MarketWatch (@MarketWatch) March 3, 2020
Currently the DOW is trending down after rebounding slightly according to Business Insiders live DOW ticker.
Powell is expected to address the media at 11 a.m. est time.