The Fed's Open Market Committee said that the ongoing public health crisis would continue to weigh on economic activity, employment, and inflation.
“Terrifyingly high unemployment and potentially rapid disinflation are powerful arguments in favor."
“We saw a risk to the outlook of the economy [from the coronavirus outbreak] and we chose to act," Fed Chair Jerome Powell says.
“Consumers shielded the economy from global headwinds for most of 2019 but they won’t prove immune to the coronavirus outbreak."
Inadequate preparation for the transition "could have an adverse impact on the safety and soundness of regulated institutions."
The CPI rose 2.1% in November on a year-on-year basis but the Fed "doesn’t expect inflation to sharply exceed its 2% goal anytime soon."
The banks' diminished ability to supply funding at short notice could have "amplified the repo rate reaction" in September, a report says.
The 266,000 jobs gain shows the labor market "is continuing to provide the key foundation for the U.S. economy.”
"Inflation needs to accelerate noticeably for the Fed to consider raising interest rates, and that doesn’t appear to be in the cards."
“We took this step to help keep the economy strong in the face of global developments and to provide some insurance against ongoing risks."
The bank's CFO pointed to loan and deposit growth in the third quarter as evidence of strong fundamentals.
Another cut in December is "contingent upon an escalation in trade tensions, further weakness in global growth, and increased geopolitical tensions."
