There are many suspicious things taking place that are being attributed to the effects of the COVID-19 Coronavirus. One of these moves comes from the Federal Reserve, which has just cut interest rates by a half-percent and since has caused stock markets to crash again.
In a surprise move, the Federal Reserve cut its benchmark interest rate by a sizable half-percentage point Tuesday in an effort to support the economy in the face of the spreading coronavirus.
Chairman Jerome Powell said at a news conference that the virus “will surely weigh on economic activity both here and abroad for some time.”
It was the Fed’s first move since last year, when it reduced its key short-term rate three times. It’s also the first time the central bank has cut its key rate between policy meetings since the 2008 financial crisis, and it’s the largest rate cut since then. The move, which the Fed’s policy committee backed unanimously, lowered its benchmark rate to a range of 1% to 1.25%.
The Dow Jones Industrial Average, which had been down as much as 356 points shortly before the Fed’s announcement, initially jumped on the news when it was announced at 10 a.m. Eastern time. The surge was short-lived. By late morning, the Dow was down about 300 points. Still, on Monday, the Dow had rocketed up nearly 1,300 points — its largest percentage gain since 2009.
The Fed’s announcement of a steep rate cut signaled its growing concern that the coronavirus, which is depressing economic activity across the world, poses an escalating threat and could trigger a recession. Yet even before the Fed’s action Tuesday, economists had been cautioning that lower rates aren’t the ideal prescription for the threat posed by the coronavirus. (source)
This does not come as a surprise to me, for as the AP notes, this is not something considered to be an ideal way to fix the current economic situation.
From what we can tell, the moves are not being made necessarily to cause calm, but to instill panic in people. Indeed, we do not have “definitive” proof this is so. We can only infer based on actions, and given the nature of this action, and the knowledge of what could happen in different situations, it is not unreasonable to put such forth as a reasonably and sound-minded thesis.
This is something to be watched closely.