The Federal Reserve lowered the target range for its federal funds rate by 50bps to 1-1.25 %

The Fed reiterated is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy. It is the first emergency rate cut since the 2008 financial crisis although markets were already pricing in a cut of 50bps or 75bps in the next FOMC meeting on March 18th.

The move follows a G7 announcement made earlier in the day in which policymakers reaffirmed their commitment to use all appropriate policy tools to achieve strong and sustainable growth, although failed to provide specific actions. The interest on excess reserves rate (IOER) was also cut by 50bps to 1.1%, following a 5bps rise in January. The IOER is usually seen as a guardrail for the funds rate.