to this challenge will come from others, most
notably health professionals.”
Indeed, the Fed’s announcement of a steep rate
cut signaled its concern that the coronavirus,
which is depressing economic activity across
the world, poses an escalating threat and could
trigger a recession. Rising uncertainty about
how and when the threat will be resolved is
pressuring markets. Powell said that since last
week, when several Fed officials had said they
saw no urgent need to cut rates, “we have seen a
broader spread of the virus.”
“So, we saw a risk to the economy, and we chose
to act,” he added.
At the same time, Powell sought to balance
those concerns by noting that U.S. economy
remained sturdy, with unemployment low and
consumer spending solid.
“The economy continues to perform well,” he
said. “We will get to the other side of this.”
The Fed’s statement announcing its rate cut
said it would “act as appropriate to support the
economy,” which economists saw as a sign it’s
leaning toward an additional rate cut, perhaps at
its next policy meeting in two weeks. Emergency
cuts like Tuesday’s have typically been followed
by further reductions soon afterward. Tuesday’s
move, which the Fed’s policy committee backed
unanimously, lowered its benchmark rate to a
range of 1% to 1.25%.
On Tuesday, Australia’s central bank announced
that it was cutting its official rate by a quarter-
point to a record low of 0.5% and cited the
coronavirus’ “significant effect” on the economy
as the reason. Just as in Australia, central banks
in Japan and Europe have almost no more room