As coronavirus continues to spread around the world, the American Federal Reserve has taken the highly unusual step of implementing an emergency rate cut ahead of its next scheduled FOMC meeting later this month.
Fed chairman Jerome Powell said the unanimous decision to cut rates was made in order to prevent further economic disruption stemming from coronavirus – as we reported in our bulletins last week, global markets have slumped to record losses in recent days and many major corporations have issued profit warnings.
Chairman Powell said, “Officials saw the virus spreading and this represented a material change in the outlook for economic growth. We’ve come to the view now that it is time to act in support of the economy. Once we reached that decision, we decided to go ahead.”
The official statement from the Federal Reserve seconded this, explaining “The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity.”
This of course is great news for gold as safe haven, demand is likely to push gold prices higher – something that yesterday (Tuesday) was given even more credence by the U.S. Treasury’s 10-year yield slumping to a record low. Buy now to capitalise.