The Federal Reserve has cut the target rate on the Fed funds interest rate by 50 basis points.
This is a developing story. Return to this post for updates.
The Federal Reserve announced this morning that it has cut interest rates as a result of the risk of the coronavirus.
In a statement, the Fed said it cut its benchmark federal funds rate by a half-point to a range of 1%-1.25%. While the fundamentals are strong, a rate cut was necessary in light of the risk to economic activity from the COVID-19, the Fed said.
The central bank also cut the discount rate in line with the Fed funds cut.
Below is the Fed’s full 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.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles.
RW instant analysis:
It never makes sense to manipulate interest rates and certainly not to attempt to ward off concerns about a virus. Money supply growth has been extraordinarily strong in recent months and this Fed action will result in even stronger money growth—which will add to the upward pressure on prices that has been slowly developing. More coverage and analysis in the EPJ Daily Alert.