US Fed Unexpectedly Cuts Benchmark Interest Rate by 0.5%p... Further Cuts Also Forecast (Comprehensive)

[Asia Economy New York=Correspondent Baek Jong-min] The U.S. central bank, the Federal Reserve (Fed), on the 2nd (local time) abruptly cut the benchmark interest rate by 0.5 percentage points. As a result, the U.S. benchmark interest rate was lowered to 1.0~1.25%.

The Fed was originally expected to cut the benchmark interest rate at the Federal Open Market Committee (FOMC) meeting scheduled for the 18th in response to the economic downturn caused by the novel coronavirus infection (COVID-19), but it preemptively lowered the rate on this day.

In a statement released on the day, the Fed announced that the rate decision was made with unanimous approval from the members. It also signaled further rate cuts.

The statement explained, "We are closely monitoring the implications and developments of COVID-19 on the economic outlook and will appropriately use the necessary tools and actions to support the economy."

Regarding this, Fed Chair Jerome Powell was reported by The Wall Street Journal to hold a press conference at 11 a.m. (local time) on the same day.

This measure came after the statement released following an emergency conference call by the finance ministers and central bank governors of the Group of Seven (G7) held that morning, which declared, "We are committed to using all appropriate tools to prevent the economic crisis caused by COVID-19."

Although the market criticized the G7 statement for lacking the expected measures, the situation reversed with the Fed's rate cut.