Powell signals Fed is open to rate cut as coronavirus raises economic concerns

Powell signals Fed is open to rate cut as coronavirus raises economic concerns

Federal Reserve Chairman Jay Powell sought to reassure businesses and investors Friday afternoon.

As concerns about the coronavirus continued to escalate, Powell said the fundamentals of the US economy remained strong.

But he signalled that the central bank would step in if necessary.

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Federal Reserve Chairman Jay Powell sought to reassure businesses and investors Friday afternoon as concerns about the coronavirus continued to escalate.

In a brief statement, Powell said the fundamentals of the US economy remained strong but signalled that the central bank was open to a rate cut if necessary. Financial markets dropped sharply this week as the government warned the respiratory illness COVID-19 would likely spread through communities in the US.

“The coronavirus poses evolving risks to economic activity,” Powell said. “The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy.”

The policy-setting Federal Open Market Committee lowered its benchmark interest rate three times last year, bringing the target range to historically low levels of between 1.5% and 1.75%. Wall Street is pricing in a 100% chance that the FOMC will cut further at its next meeting in March, according to the closely watched CME FedWatch tool.

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