The U.S. Federal Reserve announced Tuesday that it would cut interest rates to mitigate the economic slowdown caused by the coronavirus, the first emergency cut since the 2008 financial crisis and a move clamored for by President Trump.
“The coronavirus poses evolving risks to economic activity,” the Fed said in a statement. “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.”
The cut of 50 basis points lowers the federal-funds rate to a range between 1 and 1.25 percent, and was approved unanimously. Last year, the central bank cut rates three times for a total of 75 basis points.
Markets immediately responded, with the Dow Jones Industrial Average, the S&P 500, and the Nasdaq all seeing gains after the announcement.
The move comes after President Trump tweeted Tuesday morning to complain about the lack of action by the Fed and its chairman, Jerome Powell, in the wake of the coronavirus.
“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,” the president tweeted.
Last week, Powell said in a statement that the Fed would “act as appropriate” during the “evolving risks” of the outbreak, but that the U.S. economy remained “strong.”