Fed cuts rate half point

It's a drastic move amid a spreading virus. Officials recognize the coronavirus has the ability to slow or stall U.S. economy.

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March 3, 2020 - 4:34 PM

Federal Reserve Board Chairman Jerome Powell. Photo by Alex Wong/Getty Images/TNS

The Federal Reserve slashed interest rates by half a percentage point in the first such emergency move since the 2008 financial crisis, amid mounting concern that the coronavirus outbreak threatens to slow or stall the record U.S. economic expansion.

“My colleagues and I took this action to help the U.S. economy keep strong in the face of new risks to the economic outlook,” Fed Chairman Jerome Powell told a hastily convened press conference in Washington on Tuesday. “The spread of the coronavirus has brought new challenges and risks.”

But in a sign of how skeptical investors are that rate cuts will be an effective tool in combating the economic damage caused by the virus, U.S. stocks only rallied briefly after the surprise announcement.

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