Federal Reserve cuts interest rate in bid to stop coronavirus tanking US economy

Announcement reflects the largest interest rate cuts since the 2008 financial crisis

The US Federal Reserve has announced it will cut interest rates by a half percentage point, an emergency move meant to combat a potential economic downturn due to the global spread of the coronavirus.

Stocks rebounded sharply after the Federal Reserve announced the rate cut, the largest since the 2008 financial crisis.

In a statement, the Fed suggested it was delivering the rate cuts to protect the country's historic economic expansion as it deals with a potential outbreak of the deadly Wuhan coronavirus already responsible for six deaths in the US.

“The coronavirus poses evolving risks to economic activity,” the statement read. “In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point.”

The Fed added that it was “closely monitoring developments and their implications for the economic outlook” and would “use its tools and act as appropriate to support the economy.”

The interest rate cuts received unanimous support among voting members of the Federal Open Market Committee, Bloomberg News reported, just hours after similar announcements were made by financial leaders from the G-7, who said they would “use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks” amid the coronavirus outbreak.

The Trump administration has meanwhile touted its efforts to mitigate the spread of the coronavirus in the US, as health officials confirmed nearly 100 cases nationwide on Tuesday.

Steve Mnuchin, US Treasury secretary, told a congressional panel: “This administration is closely monitoring the coronavirus and its effects on public health, markets, the broader economy and supply chains.”

He added: “We have a very resilient U.S. economy as we go into the experience of the coronavirus.”

While the president has long called for the Fed to cut interest rates, he continued demanding further action in a tweet posted shortly after the announcement was made on Tuesday morning.

“The Federal Reserve is cutting but must further ease and, most importantly, come into line with other countries/competitors”, Mr Trump wrote.

He added: “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!”