'Covid-19': US Federal Reserve lowers base rate

To reduce the risk to the economy caused by a new coronavirus spread, the US central bank the Federal Reserve System (FRS) at an extraordinary meeting on Tuesday decided to cut the base interest rate.

The FRS Open Market Committee unanimously decided to lower the benchmark interest rate target by 0.5 percentage points to 1-1.25%.

This is the first time since the 2008 economic crisis that a decision on changing the benchmark interest rate was taken at an extraordinary meeting. Ordinary sitting is scheduled for 18 March.

In addition, the FRS normally changes the interest rate by only 0.25 percentage points.

Following the FRS's decision to cut interest rates, President Donald Trump wrote in a tweet that the central bank must cut the interest rate even more to make the US as competitive as other countries.

Trump often criticizes the FRS interest rate policy, blaming it for reducing the competitiveness of the US economy and demanding that the base rate be lowered. In doing so, Trump violates the unwritten law that US presidents do not publicly express FRS policies to undermine central bank independence.