Tag: Federal Reserve interest cut

Live updates: Fed cuts interest rate; G-7 finance chiefs stop short of announcing specific actions to contain coronavirus fallout

Washington Post logoWith the coronavirus spreading unpredictably and Americans bracing for an increasing impact at home, the Federal Reserve made an emergency interest rate cut Tuesday, slashing the benchmark U.S. rate by half a percentage point.

The central bank has not made an emergency move like this since late 2008. It was also a sign that global central banks are prepared to act to contain the economic fallout from the coronavirus. The move came after President Trump, in a tweet, called for a “big” interest rate cut by the Federal Reserve “to make up for China’s coronavirus situation and slowdown.”

The markets quickly rallied after the Federal Reserve announced the decision. The rebound came after a volatile morning, with futures pointing positive and then staging a U-turn. Continue reading.

If the U.S. economy is in good shape, why is the Federal Reserve cutting interest rates?

Washington Post logoThe Federal Reserve did something Wednesday that it hasn’t done in more than a decade: cut interest rates. The question on a lot of people’s minds is why.

Lowering interest rates, the Fed’s main way to boost the economy, is typically used in dire times, which it’s difficult to argue the United States is experiencing right now. Instead, top Fed officials are defending this as an “insurance cut” that’s akin to an immunization shot in the arm. They want to counteract the negative effects of President Trump’s trade war and prevent the United States from catching the same cold that Europe, China and elsewhere seem to have.

The Fed’s announced a quarter-point cut a widely expected move to lower the benchmark U.S. interest rate from about 2.5 percent down to just shy of 2.25 percent. But the Fed seldom does just one cut, which is why Trump, Wall Street and much of the world will be listening closely to Powell for signs of when another cut is likely.

View the complete July 31 article by Heather Long on The Washington Post website here.