Fed Makes Emergency Rate Cut as Markets Tremble Over Coronavirus

If anything, containing the longer-term economic fallout may necessitate preventive actions that will weigh on near-term economic growth, like restricting air travel, closing movie theaters, shuttering factories and quarantining workers. China, the initial source of the outbreak, has engaged in those types of restrictions, hurting its economy temporarily but enabling it to slow the virus’s spread.

Anthony S. Fauci, the director of the Centers for Disease Control and Prevention, called China’s measures “rather draconian” on Tuesday at a news conference but acknowledged that they had slowed the number of virus cases. “They have taken social distancing to its farthest extreme,” he said.

Many economists predict that the United States could face a significant slowdown — or even a recession — if efforts to contain an outbreak here fail.

Neil Dutta, the head of economic research at Renaissance Macro Research, wrote in a note after the announcement that “the Fed’s tools are imperfect and not adequate to deal with a public health crisis.” He added that “the panic needs to come from the opposite of 17th Street” — which is where the White House is.

President Trump said on Tuesday that he might further tighten limits on international travel in hopes of blocking the arrival of more visitors infected by the coronavirus, but he ruled out for now any restrictions on travel within the United States.

“We’re not looking at that at all,” Mr. Trump said. “But we’re looking at other countries and we’re being very stringent,” he told reporters before boarding his Marine One helicopter to fly to the National Institutes of Health for a visit.

Vice President Mike Pence said the C.D.C. would lift all restrictions on testing for the coronavirus and would release new guidelines to fast-track testing for people who fear they have it, even if they are displaying only mild symptoms. But Mr. Pence said the federal government did not intend to dictate school or office closings, saying that “these decisions are best made at the state and local level.”

Article source: https://www.nytimes.com/2020/03/03/business/economy/fed-rate-cut.html