In a surprise move, the Federal Reserve cut its benchmark interest rate by a sizable half-percentage point Tuesday in an effort to support the economy in the face of the spreading coronavirus. Chairman Jerome Powell said at a news conference that the virus "will surely weigh on economic activity both here and abroad for some time." It was the Fed's first move since last year, when it reduced its key short-term rate three times. It's also the first time the central bank has cut its key rate between policy meetings since the 2008 financial crisis, and it's the largest rate cut since then, reports the AP. The move, which the Fed's policy committee backed unanimously, lowered its benchmark rate to a range of 1% to 1.25%. More:
- The Dow, which had been down as much as 356 points shortly before the Fed's announcement, resumed its fall later after initially rising on the news. As of 11:45am it was down 398 points. On Monday, though, the Dow had rocketed up nearly 1,300 points—its largest percentage gain since 2009.
- At his news conference after the rate cut, Powell was asked what had changed in his view from last week, when several Fed officials said they saw no immediate need to cut rates even as stock markets endured their biggest losses since the 2008 financial crisis. The chairman replied that "we have seen a broader spread of the virus. So, we saw a risk to the economy and we chose to act."