The US Federal Reserve (Fed) reduced the policy interest rate by 50 basis points to the range of 1-1.25 percent before the Open Market Committee (FOMC) meeting on March 17-18, as concerns about the economic effects of the new type of coronavirus (Covid-19) epidemic increased. pulled.
In the statement made by the Fed, it was stated that the fundamentals of the US economy remain strong, but the Covid-19 epidemic poses developing risks to economic activities.
In the statement, it was stated that in line with these risks, the FOMC decided to reduce the policy rate by 50 basis points to the range of 1-1.25 percent in order to support the targets for employment and price stability.
In the statement, it was emphasized that the committee is closely monitoring the developments regarding the Covid-19 epidemic and its effects on the economic outlook, and it was noted that appropriate tools will be used to support the economy.
The interest rate cut decision, taken upon increasing concerns about the Covid-19 epidemic, was the first interest rate decision taken by the FOMC before its planned meetings since the 2008 global crisis.
Meanwhile, US President Donald Trump, in his statement on his social media account, stated that the Fed did not consider the interest rate cut sufficient. Trump called for further interest rate cuts.
“Interest rate cut” statement from Fed Chairman Powell
US Federal Reserve (Fed) Chairman Jerome Powell stated that the risks posed by the new type of coronavirus (Covid-19) epidemic to the US economy have changed significantly and that they have relaxed the monetary policy stance in order to support the economy.
Powell held a press conference after the Fed reduced the policy rate by 50 basis points to the range of 1-1.25 percent.
Stating that the interest rate cut decision was taken to keep the US economy strong, Powell explained that the fundamentals of the country’s economy continue to remain solid, but the Covid-19 epidemic poses new risks.
“The risks have clearly changed”
Powell stated that the epidemic has damaged economic activities in many countries and caused significant movements in financial markets, and expressed that the impact of the virus has begun to be seen in various sectors, especially tourism, and that they are concerned about sectors that rely on the global supply chain.
Emphasizing that the impact of the virus on the global economy remains uncertain, Powell said, “We concluded that the risks to the US economic outlook have clearly changed. In response, we relaxed the monetary policy stance to further support the economy.” said.
Powell underlined that they will continue to closely monitor the developments and their effects on the economic outlook and stated that they will take appropriate steps to support the economy.
“All vehicles have been reviewed”
Pointing out that it is uncertain how long the epidemic will last, Powell stated that the US economy will return to its strong growth.
Noting that they are in regular communication with the central banks of other countries, Powell said, “The statement made today by G7 finance ministers and central bank presidents reflects high-level coordination and determination to use existing tools.” he said.
Stating that countries’ central banks will make decisions in line with their fiscal policies, Powell stated that their current policy stances support their goals.
Powell emphasized that the US economy and financial markets continue to function well and stated that they are reviewing all tools, but they are not considering using any tool other than interest rate cuts for now.
“We will never take political concerns into account”
Stating that the interest rate cut decision will make a significant contribution to the economy, Powell noted that the decision will support financial conditions and increase economic confidence.
Answering a question about whether there was political pressure in the Fed’s decision to cut interest rates, Powell said, “It is very important for people to understand that we always make our decisions based on our analysis. We will always make our decisions in the interest of the American people in line with the duties given to us by Congress, and will never take political concerns into account.” ” he replied.
Support from US Treasury Secretary Mnuchin
US Treasury Secretary Steven Mnuchin stated that he supports the interest rate cut decision taken by the US Federal Reserve (Fed) against the economic concerns caused by the Covid-19 epidemic.
Mnuchin, who attended the session held by the House of Representatives Ways and Means Committee, said that the effects of the Covid-19 epidemic on public health, supply chain markets and the economy are being closely monitored.
Mnuchin pointed out that they are in communication with countries and international organizations against the virus and the damage it causes, and said, “We are ready to work with Congress on the emergency financing package and other related issues.” he said.
Asked whether there are temporary measures such as suspending customs tariffs on products imported from China against the Covid-19 epidemic, Mnuchin said that this is not on the agenda at the moment.
“We’re looking at all the options that we think are important to help small and medium-sized companies and specific areas of the economy that will be impacted by the pandemic,” Mnuchin said. said.
Evaluating the US Federal Reserve’s (Fed) decision to reduce interest rates against the economic effects of the Covid-19 epidemic, Mnuchin said, “I support the Fed’s decision. I think they did the right thing.” he said.
Pointing out that the Covid-19 epidemic will have a short-term impact on the economy, Mnuchin noted that the problems caused by the epidemic are different from the financial crisis.
Mnuchin said, “Covid-19 will have an impact on the economy, but I trust our healthcare workers, they will develop the medicine and vaccine to treat it.” said.
Source: https://www.aa.com.tr/tr/ekonomi/fedden-surpriz-faiz-indirimi-/1753404
