The Federal Reserve reduces rates to mitigate the impact of the coronavirus, the actions of the US. UU. Fall

WASHINGTON: The United States Federal Reserve It cut interest rates on Tuesday in an attempt to protect the world's largest economy from the impact of the world, but the emergency movement failed to comfort the US financial markets. UU. affected by concerns about a deeper and lasting slowdown.

Fed Chairman Jerome Powell reiterated his opinion that the US economy is still strong, but said the spread of the virus had caused a material change in the growth prospects of the US central bank.

The virus and the measures being taken to contain it will surely weigh on economic activity, both here and abroad, for some time, Powell said at a press conference shortly after policy makers decided to cut rates by half a point. percentage for a target range of 1.00% to 1.25%.

Underlining how serious it is that the central bank sees the situation in rapid evolution, it was the first rate cut outside a meeting of legislators regularly scheduled since 2008 at the height of the financial crisis.

We have come to view now that it is time to act in support of the economy, he said. “I know that the economy of the United States is strong and we will get to the other side of this; I hope we return to solid growth and a solid labor market as well.

Powell acknowledged that the outlook is uncertain and that the situation is fluid.

The pathogen, which originated in China, causes respiratory diseases that have been fatal in approximately 2% of cases, and governments and companies have closed schools and restricted travel and large meetings in response, reducing the production of the factories in China and disrupting the production of goods worldwide. .

The three main indexes of the US stock market. UU. They closed almost 3% below, while the 10-year US Treasury yield fell below 1% for the first time.

President Donald Trump Upon arriving at the White House when the US markets closed, he told reporters that he had not seen the market crash on Tuesday and that he was focused on the federal response to the coronavirus.

I think they should do more. I think they hinted that they won't do much more, and that's unfortunate. In my opinion, he gave a very bad signal, said about Powell.

Merchants believe the Fed is not over. Futures linked to the Fed's policy rate were setting prices at another rate cut in June. Fed policymakers will provide their own rate trajectory expectations, along with economic growth forecasts, at the end of their March 17 and 18 meeting.

TURN AROUND

A little over a week ago, most Fed officials said they expected the effects of the virus to be temporary and maintained their opinion that after three rate cuts last year, the US economy. UU. I was well positioned to face the crises.

The questions now become if, how much and when the Fed could offer greater monetary policy easing, Oxford Economics analyst Gregory Daco wrote after the Powell press conference. If Fed officials believe the chances of an impending recession are high, they will continue to be very aggressive in reducing rates.

With 90,000 cases worldwide in 77 countries and territories, the virus has overturned global supply chains, and companies warn daily about blows to their sales and profits.

On Tuesday International Monetary Fund and the World Bank canceled its April meetings in Washington, joining the list of organizations that disconnect the planned events.

Central bank flexibility can lubricate credit markets and increase demand by reducing the cost of loans. But, Powell said, it cannot repair disrupted global supply chains or convince people to fly, attend meetings or even go to school, especially if local governments or companies prohibit such activities.

We recognize that a rate cut will not reduce the infection rate, will not repair a broken supply chain; We understand that, we don't believe we have all the answers, Powell said. Even so, he said, it will help support general economic activity.

Powell participated earlier Tuesday in a conference call with the main financial authorities of the seven largest advanced economies in the world, which concluded with a statement that they would take all appropriate measures to support the global economy. At his press conference, he said the Fed was in active talks with other central banks and said that future coordinated action could still occur.

Ya ha habido acción de otros bancos centrales. On Tuesday temprano, los bancos centrales de Australia y Malasia redujeron las tasas y el lunes el Banco de Japón tomó medidas para proporcionar liquidez para estabilizar los mercados financieros allí.

US Treasury Secretary Steven Mnuchin applauded the Fed's decision, saying it would help the US economy. In a tweet after the Fed move, President Donald Trump kept up what has been constant pressure on the central bank to do even more. "More easing and more cutting," he said.

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