The Federal Reserve is reacting to the impact coronavirus is having on the market and on the global economy. The central banking system issued an emergency rate cut, slashing the federal funds rate a half of a percentage point to between 1% and 1.25%.
The Wall Street Journal reports that this is the first cut “to occur in between a scheduled policy meeting since the 2008 financial crisis.”
The action was approved unanimously. In a statement, the central bank also held out the prospect for further stimulus. “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,” the statement said.
This news came a short time after an emergency conference call involving finance ministers and central bank presidents involved the G7. The call was led by U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell. The AP reports:
Seven major economies pledged to use “all appropriate tools” to deal with the spreading coronavirus but announced no immediate actions.
The group of major industrial countries, referred to as the G-7, said Tuesday that it was “ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy.”