The Federal Reserve implemented a half-percentage-point rate cut on Tuesday. Markets slid, amidst fears the coronavirus epidemic is raising recession risks for the U.S. and global economies.
The Fed reduced the federal-funds rate to a range between 1% and 1.25%. This was the first rate change in between scheduled Fed policy meetings since the financial crisis of 2008. Stock markets fell anyway. Market indexes dropped around 3% and the yield on the benchmark 10-year U.S. Treasury dipped below 1% for the first time.
Usually, the central bank reserves these moves for when the economic outlook has quickly deteriorated. This was the case in early 2001 and early 2008, when the U.S. economy was slipping into recession.
The market’s moves Tuesday showed how much investors are concerned the central bank cannot prevent a drop-off in confidence and spending without influence from public-health authorities.
It is unknown how long this activity will last and just how much output will decline. Not sure how this will affect your refinance or home mortgage? Reach out to Scott Bennett at 503-703-4699 or scott@altmo.com to talk about your situation.
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