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article imageWith an eye on COVID-19, Federal Reserve makes emergency rate cut

By Karen Graham     Mar 3, 2020 in Politics
After being railed against by President Trump early Tuesday, the Federal Reserve cut the benchmark interest rate by a half-point Tuesday in its first emergency rate cut since the Great Recession.
“The coronavirus poses evolving risks to economic activity,” the Fed said in a statement to announce the move, its first such inter-meeting reduction since October 2008 during the financial crisis.
The Fed's statement also said that it is "closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy."
After being down as much as 356 points shortly before the announcement, the Dow Jones Industrial Average moved into positive territory after the announcement, although the Dow dropped later in the morning after VISA and other credit card companies said current-quarter revenue will miss projections due to the coronavirus, according to Investor's Business Daily.
"Cross-border growth rates have deteriorated week by week since the coronavirus outbreak in China, and trends through Feb. 28, 2020, do not yet fully reflect the impact of the coronavirus spreading outside of Asia," Visa said. "As such, we anticipate that this deteriorating trend has not bottomed out yet."
Pressure from Trump
In a series of tweets early Tuesday morning, President Donald Trump took the Federal Reserve to task, tweeting: "Our Federal Reserve has us paying higher rates than many others, when we should be paying less. Tough on our exporters and puts the USA at a competitive disadvantage. Must be the other way around. Should ease and cut rate big. Jerome Powell led Federal Reserve has called it wrong from day one. Sad!"
Following today's shift, Trump called for even more to be done to stimulate the economy, one issue that is key to his reelection plans. According to Bloomberg, in a new tweet, the president demanded that the Fed “must further ease and, most importantly, come into line with other countries/competitors. We are not playing on a level field. Not fair to USA.”
More about coronavirus, Federal reserve, half percentage point, Trump, US economy
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