Brian Chappatta, Columnist

Fed Delivers Shock and Awe With a Huge Rate Cut

The central bank undertakes its first emergency action since 2008 after signaling little urgency just days ago.

March 3, 2020 at 4:54 PM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Is another cut in store for the March 18 meeting?
Photographer: Andrew Harrer/Bloomberg

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The Federal Reserve’s strategy to combat the coronavirus outbreak and its impact on financial markets and the longest U.S. economic expansion in history turned out to be nothing short of shock and awe.

In the central bank’s first emergency action since 2008, Chair Jerome Powell and other Fed officials voted unanimously to immediately lower the fed funds rate by 50 basis points to a range of 1% to 1.25%. The surprise wasn’t necessarily the magnitude of the move: Bank of America Corp., Barclays Plc, Goldman Sachs Group Inc., JPMorgan Chase & Co. and NatWest Markets were just some of the Fed’s primary dealers who were expecting a half-point move at or before the central bank’s March 18 decision, in no small part because of the rapid decline in U.S. Treasury yields last week.