Fed Cuts Key Rate 0.50%

The surprise rate cut comes before the central bank's next scheduled policy meeting.

By Bernice Napach | March 03, 2020 at 10:39 AM

The Federal Reserve announced a surprise 50 basis-point rate cut in the federal funds rate, citing economic risks caused by the spreading coronavirus.

The move rallied the major U.S. stock indexes, and bond yields tumbled. The Dow Jones Industrial Average, S&P 500 and Nasdaq rose in early trading.

The cut lowered the fed funds rate to a range between 1% and 1.25%. It was the first cut to occur between a regularly scheduled Fed policymaking meeting and followed an aggressive rate cut by Australia’s central bank earlier today. The next Fed policy meeting is set for March 17-18.

In its statement the Fed noted that “the fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity.” The Fed added it is “closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.”

Fed Chairman Jerome Powell is holding a press conference Tuesday at 11 a.m.

The Fed’s rate cut follows a warning by the Organization for Economic Cooperation and Development on Monday that the coronavirus’ spread would slash economic growth in the global economy and governments should act immediately to address its impact.

https://www.thinkadvisor.com/2020/03/03/fed-cuts-key-rate-0-50/?kw=Fed%20Cuts%20Key%20Rate%200.50%25&utm_source=email&utm_medium=enl&utm_campaign=breakingnewsalert&utm_content=20200303&utm_term=tadv