Jul 31, 2019

Fed cuts interest rates for the first time since 2008

Federal Reserve Chairman Jerome Powell speaks at a press conference in June. Photo: Ting Shen/Xinhua via Getty Images

In its biggest decision since 2015, the Federal Reserve said on Wednesday it would slash its benchmark interest rate by a quarter point, as expected, in an effort to extend the economic boom and boost weak inflation.

Between the lines: Speaking to reporters at a press conference following the decision, Fed Chair Jerome Powell re-adjusted the market‘s expectations of a series of more rate cuts by the end of the year. Stocks dropped sharply during the press conference, but after regaining some ground, the Dow finished down more than 300 points, while the S&P fell 1.19% and the Nasdaq dropped 1.1%.

The Fed also announced it would end the runoff of its multi-trillion balance sheet on Thursday — 2 months earlier than expected.

Details:

  • Echoing comments from recent members of the Fed in recent weeks, the central bank noted in its policy statement that its decision to reduce rates came "in light of the implications of global developments for the economic outlook" — namely the trade war and faltering economies around the world.
  • Powell spent most of the press conference trying not to imply that he was committed to this as a "one-and-done" action or a series of rate cuts.
  • Traders trimmed bets that the Fed would cut multiple times this year.

President Trump — who, for the past year, has broken presidential norms by consistently calling on the Fed for looser monetary policy — said Powell "let us down" (it's unclear who "us" refers to) in not saying this was "the beginning of a lengthy and aggressive rate-cutting cycle."

  • Powell, during the press conference, reiterated the Fed's political independence, despite the fact that Trump has so far gotten everything he's wanted from the central bank.

The bottom line: While previous Fed regimes have cut rates when the economy was not in the throes of a recession, it's still a rare move — one that will likely be a legacy-shaping milestone in Jerome Powell's tenure as Fed chairman.

Go deeper: Why the Fed wants higher inflation

Go deeper

The coronavirus is making it even harder to care for seniors

Illustration: Aïda Amer/Axios

Caring for older adults was already expensive, emotionally taxing and logistically difficult — and the coronavirus is only making it worse.

Why it matters: People older than 65 have the highest risk of dying from the virus, and outbreaks have been rampant in long-term care facilities. That is creating anxiety for seniors and their families.

World coronavirus updates

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

Countries where novel coronavirus cases are falling may be hit with a "second peak" if they relax restrictions too soon, World Health Organization emergencies chief Mike Ryan warned during a briefing Monday. "We're still very much in a phase where the disease is actually on the way up," he added.

By the numbers: Almost 5.5 million people have tested positive for the virus as of Monday, and more than 2.2 million have recovered. The U.S. has reported the most cases in the world (over 1.6 million from 14.6 million tests). The U.K. is reporting over 36,900 deaths from the coronavirus — the most fatalities outside the U.S.

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 5 a.m. ET: 5,508,904 — Total deaths: 346,508 — Total recoveries — 2,234,510Map.
  2. U.S.: Total confirmed cases as of 5 a.m. ET: 1,662,768 — Total deaths: 98,223 — Total recoveries: 379,157 — Total tested: 14,604,942Map.
  3. World: Italy reports lowest number of new cases since February — Ireland reports no new coronavirus deaths on Monday for the first time since March 21 — WHO suspends trial of hydroxychloroquine over safety concerns.
  4. 2020: Trump threatens to move Republican convention from North Carolina — Joe Biden makes first public appearance in two months.
  5. Public health: Officials are urging Americans to wear masks over Memorial Day.
  6. Economy: New York stock exchange to reopen its floor on Tuesday — White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

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Updated 2 hours ago - Politics & Policy