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Interest rate cut leaves U.S. Federal Reserve with little ammunition to fight potential recession

Traders gather at the post of Specialist Anthony Matesic, background center, on the floor of the New York Stock Exchange, Tuesday, Feb. 18, 2020. Stocks are opening lower on Wall Street after Apple said it would fail to meet its revenue forecast for the current quarter due to the impact of the virus outbreak in China. (AP Photo/Richard Drew)

Lowering interest rates won’t lower transmission rates of COVID-19. But could the Federal Reserve’s emergency decision to cut rates by a half percentage point on Tuesday at least quell economic instability caused by the outbreak?

Probably not, says Robert Triest, professor and chair of Northeastern’s economics department.

“It will help boost confidence and temporarily prop up the stock market,” he says. “But something like an interest rate cut will ultimately have very limited efficacy because it’s not a tool that targets this kind of supply shock.”

Read more at News@Northeastern.

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