The US Federal Reserve issued a brief statement this morning saying it had cut its funds rate target by 50 basis points, to a 1-1.25% range, largely because of its concern at the coronavirus, COVID-19.
The US central bank followed the Reserve Bank of Australia, which cut its cashrate by 25 basis points yesterday to 0.5%.
The Federal Reserve said: “The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment & price stability goals, the Federal open market committee decided today to lower the target range for the federal funds rate by half a percentage point, to 1-1¼%. The committee is closely monitoring developments & their implications for the economic outlook and will use its tools and act as appropriate to support the economy.”
The Fed made 3 25-point cuts to its funds rate in July, September & October last year.
The Reserve Bank of Australia cut its cashrate by 25 basis points last June, again in July and a third time at the end of September, taking it to 0.75%.
New Zealand’s Reserve Bank reduced its official cashrate by 25 basis points to 1.5% last May, its first cut since 2016, and by another 50 points to 1% in August 2019.
Related & earlier stories:
4 March 2020: Australian central bank cuts cashrate
13 February 2020: Reserve Bank holds cashrate, debates outlook
12 December 2019: Fed holds rate after 3 cuts
8 August 2019: Cashrate cut by a third, gold & NZX indices up, $NZ down
Attribution: Federal Reserve.