The Fed Makes Its Coronavirus Cut

The Federal Reserve cut the target range for its short-term federal funds rate by half a percentage point on Tuesday morning, setting the new range at 1% to 1.25%. The unanimous move from the central bank came as economists weigh the threat of the Covid-19 coronavirus outbreak to the global economy, both in terms of the short-term potential for massive disruptions and the longer-term implications for future growth.

Yet despite the Fed's assertion that the move will support its broader policy goals, it's unclear how reducing short-term rates on an emergency basis will avoid any of the harm that the coronavirus could do to the economy. If anything, the reduction leaves the Fed with fewer tools to avoid future economic problems for which rate cuts could be much more effective.

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Source Fool.com