Fed cuts rates sharply in response to coronavirus threat

Dow plunges 550 points, enters correction on coronavirus fears

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The Federal Reserve cut interest rates Tuesday in a rare emergency move, responding aggressively to the growing threat the coronavirus poses to the economy and financial markets.

The Fed lowered its key federal fund rates by half a percentage point to a range of 1% to 1.25%, the central bank said in a statement. It marked the Fed’s first rate cut between scheduled meetings since the depths of the financial crisis in 2008.

Stocks swung wildly through the morning. After sliding on the absence of a more forceful response from global central banks, the Dow was up more than 100 points following the Fed’s rate cut announcement. Then the blue-chip index reversed course and was down more than 200 points in midday trading.  

“The fundamentals of the U.S. economy remain strong,” the Fed’s policymaking committee said in a statement. “However, the coronavirus poses evolving risks to economic activity.”

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