Will the Fed's Last Stand Outlast the Coronavirus?
On Sunday afternoon, in another extraordinary move, the Federal Reserve cut the target range for its short-term federal funds rate by a full percentage point. That moved the new range for the key interest rate to 0% to 0.25%.
As much attention as the unprecedented second consecutive inter-meeting rate cut got, the central bank's other actions could have even more importance. Nevertheless, as the market plunges following the Fed announcement, it's clear that investors want something more concrete beyond simple monetary policy.
The Fed gave its rationale for reducing rates, arguing simply that "the effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook." With no inflationary pressure -- especially given the recent crash in crude oil, which should soon contribute falling prices for gasoline and other energy products -- the Fed felt comfortable that it could meet its dual mandate to support the economy without sending prices through the roof.
Source Fool.com
