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Federal Reserve cuts key interest rate due to virus risk

AFP – The US Federal Reserve announced an emergency rate cut Tuesday, responding to the growing economic risk posed by the coronavirus epidemic and giving President Donald Trump the stimulus he has called for.

In a unanimous decision, the Fed’s policy-setting committee slashed its key interest rate by a half point to a range of 1.0-1.25.

The large, highly unusual cut, taken just 15 days before the next scheduled policy meeting, reflected growing concerns that the spreading virus will take a bite out of the US and global economies, as supply chains linked to China, the epicenter of the outbreak, are shut down.

While US economic fundamentals “remain strong,” the “coronavirus poses evolving risks to economic activity,” the Federal Open Market Committee said in a statement.

The central bank “is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.”

The Fed has not made an inter-meeting rate cut since late 2008, during the global financial crisis.

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