MNI POLICY: Federal Reserve Cuts Rate By Half Percentage Point

By Evan Ryser

     WASHINGTON (MNI) - The Federal Reserve cut its benchmark rate by 50 bps

Tuesday morning to support the economy and help stem potential disruptions from

the spreading coronavirus epidemic. 

     The Federal Open Market Committee voted unanimously to lower the federal

funds rate to a range of 1% to 1.25%, the first intermeeting cut since the 2008

financial crisis. 

     In a statement released at 10:00am EST the Fed said that while the

"fundamentals" of the U.S. economy remain strong, "the coronavirus poses

evolving risks to economic activity." 

     Chair Jay Powell is set to appear in a press conference at 11:00am EST.

     "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 interest rated paid on required and excess reserves, IOER, was lowered

to 1.10% effective March 4. 

     The statement reinforced past guidance for the Fed to continue purchasing

Treasury bills at least into the second quarter of 2020, and to continue

conducting term and overnight repurchase agreement operations at least through

April 2020.

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

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