Fed cuts interest rate in response to coronavirus impact on markets within hours of Trump criticism

Federal Reserve Chairman Jerome Powell on Tuesday announced a half percentage point cut to interest rates, the first of 2020 and the largest since 2008.

“We don’t think we have all the answers,” Powell said during a Tuesday news conference. “But today’s half point rate cut will provide a meaningful boost to the economy.”

President Donald Trump tweeted Monday night that the U.S. should follow the lead of Australia and other countries in cutting their interest rates to offset market losses resulting from the corona virus. The Dow Jones Industrial Average and other indexes suffered their worst week of losses last week since the Great Recession.

Trump tweeted:

“Australia’s Central Bank cut interest rates and stated it will most likely further ease in order to make up for China’s Coronavirus situation and slowdown. They reduced to 0.5%, a record low.

“Other countries are doing the same thing, if not more so. 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!”

Tuesday morning, Trump again criticized the central bank on Twitter.

He tweeted:

“As usual, Jay Powell and the Federal Reserve are slow to act. Germany and others are pumping money into their economies. Other Central Banks are much more aggressive. The U.S. should have, for all of the right reasons, the lowest Rate. We don’t, putting us at a competitive disadvantage. We should be leading, not following!”

Within less than an hour of Trump’s last tweet, Powell said in a news briefing that he didn’t feel pressure from Trump to cut interest rates.

“We never are going to [make] any political considerations whatsoever,” he said.

Last week, the stock suffered some of the worst losses since the 2008 financial crisis after the government announced the COVID-19 likely would spread to U.S. communities.

The decision to cut rates “comes at a time of growing concern about the impact the virus is having on the global economy,” NPR reports. “Companies around the world are shutting down production and canceling travel in response.”

Powell signaled on Friday that the central bank would be open to an additional rate cut, but economists have warned that this type of monetary policy may not be enough to protect the extension, according to the New York Times. The Federal Open Market Committee, which sets the interest rate policy, cut interest rates three times in 2019, bringing them to a historic low of between 1.5 percent and 1.75 percent.

After the rate cut was announced Tuesday morning, the president again took to Twitter.

He tweeted, “The Federal Reserve is cutting but 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. It is finally time for the Federal Reserve to LEAD. More easing and cutting!”

“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity,” the central bank said in a statement Tuesday morning.

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