The Federal Reserve made an emergency interest rate cut Tuesday, slashing the benchmark U.S. interest rate by half a percentage point, the biggest cut since the financial crisis, APA reports citing Washington Post.
The U.S. central bank has not made an emergency move like this since late 2008, and economists say it signals that global central banks are prepared to act to contain the economic fallout from the coronavirus.
Fed leaders voted unanimously in favor of the rate reduction to help stabilize the economy and financial markets as the coronavirus spreads. The highly unusual action comes on the heels of other central banks around the world lowering their interest rates and calls by President Trump for a “big” Fed rate cut.
“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 [Fed] decided today to lower the target range for the federal funds rate by 1/2 percentage point,” the Fed wrote in a statement.
The Fed’s action reduces the U.S. interest rate to just below 1.25 percent, down from 1.75 percent. Fed Chair Jerome H. Powell plans to hold a news conference at 11 a.m. on Tuesday to discuss the rare move.
The next meeting of the Fed has been scheduled for March 17-18.