Federal Reserve: Coronavirus poses "evolving risk" to the economy

Federal Reserve chairman Jerome Powell took the rare move Friday of issuing a statement meant to reassure investors, one that opened the door to a possible interest rate cut.

Why it matters: The Fed rarely issues statements like this outside of policy meetings and scheduled public appearances. It came as the stock market continues its steep decline this week. Stocks briefly pared some losses after the 2:30 p.m. EST statement came out.

"The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy."

Between the lines: In recent days, traders piled on bets that the Fed would change its wait-and-see stance and cut interest rates in mid-March because of the coronavirus.

• Bank of America predicted Friday that the Fed would trim rates by 50 basis points, considered an emergency measure.

Go deeper: The growing coronavirus recession threat