US, WASHINGTON (NEWS OBSERVATORY) — The US Federal Reserve holds a financial meeting on Wednesday in an effort to persuade markets, companies and consumers that it is ready to do everything to reduce the impact of the emerging Corona virus, although its tools are not adequately configured to meet this unprecedented threat.
The Fed is expected to use its conventional weapon to deal with the crisis, which is to reduce interest rates, as most analysts expect.
Beginning in March, with the emergence of the risks of the emerging corona virus on the American economy, the reserve decided to cut interest rates by half a point, to range between 1 and 1.5 percent.
The action was taken without waiting for the six-week periodic financial meeting, which has not happened since 2008, at the height of the “sub-prime debt” crisis.
And on Wednesday, Reserve Chairman Jerome Powell can go even as low as zero, along the lines of several central banks.
US President Donald Trump has been calling for it for months, and considers that the Fed has not done enough and thus slowed the economy’s growth.
Trump said on Twitter, a few hours before he issued the state of emergency decree, that “the Federal Reserve will finally lower interest rates to a level close to competing central banks.”
Despite his constant anger at Jerome Powell, Trump on Saturday confirmed his intention not to dismiss him.
Reducing interest rates allows you to reduce the cost of debt and thereby drive consumption, and this aims to support the economy during a traditional crisis. But nothing guarantees that this will be effective in resisting this unprecedented crisis.
The challenge facing the Federal Reserve is great, as the American economy is threatened with recession after the Wall Street witnessed its worst days Thursday since the stock market crash in 1987.
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Article is written and prepared by our foreign editors from different countries around the world – material edited and published by News Observatory staff in our US newsroom.