Seeking to bolster America’s economy amid growing fears over the coronavirus, the U.S. Federal Reserve cut interest rates on Tuesday by half a percentage point. The Fed said the emergency move puts rates in a target range of 1.00% to 1.25%.
President Trump called on the Federal Reserve to cut rates even more. The Fed “must further ease and, most importantly, come into line with other countries/competitors,” Trump tweeted. “We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!”
While the Fed said the “fundamentals of the U.S. economy remain strong,” a statement issued with today’s rate cut said, “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 today to lower the target range for the federal funds rate.”
The Fed had reduced the rate three times in 2019 for a total of 75 basis points.
The coronavirus has now spread to 77 countries and territories, infecting more than 90,000 globally, with 80,000 of them in China. China’s death toll is 2,943, with more than 75 deaths elsewhere.
Wall Street traders had been expecting the U.S. central bank to take some type of action, though most thought it would happen at the next Federal Open Market Committee meeting later this month.
The move comes the same morning the G-7 announced that it would commit unspecified tools to help the global economy deal with the threat, and as Wall Street was in the midst of another market sell-off.
Markets immediately turned higher on the announcement.
However, not all analysts were sold on the idea rate cuts are the answer. CNBC’s Jim Kramer, host of Mad Money, said “I’m just not sold on rate cuts” as a solution to the coronavirus impact on markets. “I’m interested in action.”