In emergency move, US Fed cuts interest rates to battle coronavirus

Reduces rates by half percentage point to target range of 1% to 1.25%

Reuters March 03, 2020
Reduces rates by half percentage point to target range of 1% to 1.25%. PHOTO: REUTERS

WASHINGTON: The US Federal Reserve cut interest rates on Tuesday in an emergency move designed to shield the world's largest economy from the impact of the coronavirus.

In a statement, the central bank said it was cutting rates by half a percentage point to a target range of 1% to 1.25%.

"The fundamentals of the US 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 to lower the target range for the federal funds rate," the Fed said a statement.

The decision was unanimous among policymakers.

The Fed's decision to cut interest rates before its next scheduled policy meeting on March 17-18 reflects the urgency with which the Fed feels it needs to act in order to prevent the possibility of a global recession.

Earlier during the day, United States President Donald Trump called on the Federal Reserve to cut interest rates significantly, saying higher borrowing costs are tough on its exporters and puts the country at a disadvantage.

"Our Federal Reserve has us 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," Trump said on Twitter.

Trump has repeatedly criticised Fed Chair Jerome Powell in the recent past and has said that the bank has kept interest rates too high.




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