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Opinion

Politicians must stop expecting central bankers to rescue the economy

Fed's interest rate cut backfired as coronavirus panicked markets

| Japan
Shinzo Abe attends a House of Councillors Budget Committee session on Mar. 3: why engage in messy reforms when the monetary lever is so much easier?   © Kyodo

On Tuesday, in the throes of market panic about the economic consequences of the coronavirus, the U.S. Federal Reserve pulled a rare surprise: it made an emergency 0.5% cut in interest rates, taking its benchmark rate to 1%-1.25%.

Broker screens flashed red as stocks fell and the yield on the 10-year Treasury sank to a record low. Such a sharp, potent cut should have given comfort to the market, but not now the coronavirus outbreak, badly handled by most governments, is colliding with fallout from the U.S.-China trade war.

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