The US Central Bank has slashed its interest rates policy in response to the ongoing economic crisis likely caused by the outbreak of the Coronavirus.
With continued concerns about how the spread of the virus is affecting the US economy and stock market, the central bank decreased the general rate of interest to 1%-1.25%, down by a rate of fifty points.
This comes after the Dow dropped over 1,000 points over three days, resulting in some of the worst trading days in US economic history.
Whilst other nations – particularly China and Italy – have suffered similarly dismal economic conditions as the number of cases discovered in the country continues to rise – the US has been hit particularly hard and investor confidence is beginning to drop as the country continues to grapple with the virus.
G7 Countries Pledge Action
The announcement came after a general meeting of the G7 countries financial ministers, who pledged to take action to protect their national economies in the face of the coronavirus.
In a statement, the US Central Bank suggested that whilst the US economy was still relatively strong, it was impossible to predict the ebbs and flows of market forces and, much like the virus, the economy could get worse before it gets better.
It follows a continued worry that the economic uncertainty caused by the virus could tip some nations into an unwanted recession – something that could define the Presidential race in November.
Many pundits – both domestically and internationally – have criticized the US President for his lack of direction regarding the virus and for slashing the budgets of government healthcare agencies who tackle such epidemics as these.
With no end in sight and as cases continue to grow, the US is hoping that changes to interest rates will help stabilise the economy somewhat but warned that the coronavirus would have an economic impact on the world far beyond its initial spread.
This marks the first time since the financial crash in 2008 that the US government has significantly dropped its interest rate benchmark and is a turnaround from a statement made last week, where officials suggested they were confident in the economy to survive the effects of the virus.