What Coronavirus Induced 'Emergency' Rate Cut Means For Banks
Zacks Investment Research | Mar 04, 2020 07:31AM ET
Coronavirus has led the Federal Reserve to cut interest rates by half a percentage point. This was the first unscheduled and biggest one-time move by the central bank since the 2008 financial crisis. Now, the benchmark interest rate is in the range of 1% to 1.25%.
In a press conference following the announcement, Fed Chairman Jerome Powell said “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. The spread of the coronavirus has brought new challenges and risks.”
While the Fed in the statement noted that “fundamentals of the U.S. economy remain strong,” this ‘emergency’ step spooked the markets. Investors saw this as an indication that the economy is likely to be more adversely impacted than previously expected.
All the three major indexes – S&P 500, Dow Jones and Nasdaq – that soared sharply on Monday following Powell’s statement indicating an appropriate action, declined almost 3% yesterday. Also, the 10-year Treasury yield fell below 1% for the first time as the investors moved toward safe havens.
This is not all. Themarket is expecting more easing later this year.Per the CME FedWatch Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.