Federal Reserve announces first emergency rate cut since the financial crisis

Federal Reserve Chairman Jerome Powell Testifies Before Senate Committee
WASHINGTON, DC - FEBRUARY 12: Federal Reserve Board Chairman Jerome Powell testifies during a hearing on "The Semiannual Monetary Policy Report to the Congress," in front of the Senate Banking, Housing and Urban Affairs Committee in the Dirksen Senate Office Building on February 12, 2020 in Washington, DC. (Photo by Sarah Silbiger/Getty Images)

The Federal Reserve slashed interest rates by half a percentage point on Tuesday in the wake of concerns that the coronavirus outbreak could damage the US economy.

It’s the first unscheduled, emergency rate cut since 2008, and it also marks the biggest one-time cut since then. The new benchmark interest rate is 1% to 1.25%.

While the fundamentals of the US economy remain strong, “the coronavirus poses evolving risks to economic activity,” the central bank said in a statement.

Just last week, several Fed officials said it was too early to cut rates in the face of the global virus outbreak. Fed Chairman Jerome Powell released a statement on Friday, saying the central bank would act as appropriate.

Market expectations for a half-percentage point cut for the Fed’s March 18 meeting were 100% as of Tuesday morning.

This is a developing story. It will be updated.