Industry Reacts to Fed’s Coronavirus Response

The Federal Reserve announced Tuesday that it has cut interest rates by half a percentage point in an effort to boost the U.S. economy due to the continuing spread of the coronavirus. 

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

The main borrowing rate set by the fed now sits between 1% and 1.25%, which is nearing historic lows. 

President Donald Trump sent out a series of tweets Tuesday morning, saying the Australian Central Bank cut interest rates and stated it will most likely further ease in order to make up for the slowdown caused by the coronavirus.

“Other countries are doing the same thing, if not more so,” Trump said on Twitter. “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 of the Federal Reserve has called it wrong from day one.” 

A report by Politico noted that Powell, Chairman of the Fed, addressed Congress in February and said he did not see a need to adjust interest rates. He told lawmakers, “the current stance of monetary policy will likely remain appropriate.”

Powell also said that the virus could “lead to disruptions in China that spill over the rest of the global economy” and there will “very likely” be some effect on the U.S.

In a press conference following the announcement, Powell stood by the Fed’s decision to cut interest rates and noted he is confident in the strength of the U.S. economy and that it’s “going to get to the other side of this.”