March 2, 2020
Statement·Presser·Minutes
Jerome H. Powell
March 2, 2020 FOMC Press Conference
- The chair said the decision to cut rates was made because the spread of the coronavirus had broadened over the last couple of weeks, including a slight spread in the United States, and posed a risk to the economic outlook.
- The chair said the Fed was in active discussions with central banks worldwide and had been in regular contact with their leaders, but the rate cut was based on the Fed's own domestic mandate, not a coordinated action.
- The chair said the G-7 statement from finance ministers and governors reflected a high-level commitment to use all available tools, including health-care, fiscal, and monetary policy, as appropriate.
- The chair said the Fed did not see evidence of credit market stress, insolvencies, or defaults yet, and financial markets were functioning in an orderly manner, but supervisors would work with banks to support borrowers if needed.
- The chair said a rate cut would not reduce the infection rate or fix a broken supply chain, but it would support accommodative financial conditions and boost household and business confidence.
From the opening statement
Press conference
CHAIR POWELL. Earlier today the Federal Open Market Committee announced a ½ percentage point reduction in the target range for the federal funds rate, bringing that range to 1 to 1¼ percent. My colleagues and I took this action to help the U.S. economy keep strong in the face of new risks to the economic outlook.
The fundamentals of the U.S. economy remain strong. The unemployment rate has been near half-century lows for well more than a year, the pace of job gains has been solid, and wages have been rising. These strong labor market conditions have underpinned solid household spending, which has been the key driver of economic growth over the past year. At the time of our FOMC meeting in January, prospects for continued economic growth remained favorable, and we judged that monetary policy was well positioned to support that outlook.
Since then, the spread of the coronavirus has brought new challenges and risks. The virus has afflicted many communities around the world, and our thoughts and prayers go out to those who’ve been harmed. The outbreak has also disrupted economic activity in many countries and has prompted significant movements in financial markets. The virus and the measures that are being taken to contain it will surely weigh on economic activity both here and abroad for some time. We are beginning to see the effects on the tourism and travel industries, and we are hearing concerns from industries that rely on global supply chains. The magnitude and persistence of the overall effects on the economy, however, remain highly uncertain, and the situation remains a fluid one.