US federal reserve cuts benchmark interest rate by 0.5%

By Michael Hernandez

WASHINGTON (AA) - The U.S. Federal Reserve cut its benchmark interest rate Tuesday by half a percentage point, the largest cut since the 2008 financial crisis.

The Fed said while the "fundamentals of the U.S. economy remain strong," the global spread of the new coronavirus is imperiling economic activity.

"In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4 percent," it said in announcing the decision.

The committee is "closely monitoring developments and their" economic implications, and "will use its tools and act as appropriate to support the economy," it added.

Stocks surged on the news with all three major indices jumping before returning some gains.