Photo by Mark Wilson/Getty Images
WASHINGTON, DC - SEPTEMBER 26: Federal Reserve Board Chairman Jerome Powell arrives for a news conference on September 26, 2018 in Washington, DC. The Fed raised short-term interest rates by a quarter percentage point as expected today, with market watchers expecting one more increase this year and three more in 2019.
- The Federal Reserve lowered interest rates by 50 basis points on Tuesday in an emergency cut to combat the risk of coronavirus on the US economy.
- It was the first emergency rate cut since the financial crisis in 2008.
- Here's a timeline of the last seven times the Federal Reserve handed down an emergency rate cut, and the events that spurred the move.
- Read more on Business Insider.
On Tuesday, the Federal Reserve slashed interest rates by 50 basis points to combat the risk of coronavirus on the US economy.
The lowered rate was the first emergency cut since the financial crisis in 2008. While bond markets had been pricing in at least a quarter-point reduction in March, the timing of the cut came as a surprise - it was expected that the Fed would make a move at its next scheduled meeting, March 17-18.
But the Fed didn't wait to ease monetary policy, one of its only tools to aid the economy. It's a rare move, but an action that the Fed has taken before amid events that presented a threat to the economic expansion in the US.
"The fundamentals of the US economy remain strong. However, the coronavirus poses evolving risks to economic activity," the Federal Open Market Committee said in a statement.
The Fed added that it was "closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy."
Tuesday's surprise interest-rate cut is unusual compared to recent history in that it occurred against the backdrop of a strong US equity market over the last six months, Lori Calvasina, head of US equity strategy at RBC Capital Markets, wrote in a note to clients Wednesday.
RBC Capital Markets
"All of the other emergency cuts that we examined occurred following extended periods of weakness in the stock market," she said. Before coronavirus panic sent stocks into a tailspin at the end of February, markets had been continually pushing higher.
Here are the last seven times the Federal Reserve did an emergency rate cut, how much it lowered rates, and the event that sparked the action from the central bank.