U.S. cuts rates over coronavirus economic impact as more countries report illnesses

WASHINGTON/TOKY0 (Reuters) – As the new coronavirus spreads in South Korea, Europe and the United States, the U.S. Federal Reserve cut interest rates on Tuesday in an emergency move to try to prevent a global recession with the virus taking a heavy toll on air travel, tourism and other industries.

Crowds wearing protective masks, following the outbreak of the coronavirus, are seen at the Shinjuku station in Tokyo, Japan, March 3, 2020. REUTERS/Athit Perawongmetha

Despite the Fed’s attempt to stem the economic fallout from the coronavirus, U.S. stock indexes were down more than 3%, safe-haven gold rose 3% and analysts and investors are questioning if the rate cut will be enough in the long run if the virus continues to spread. [.N] [MKTS/GLOB]

In Iran, doctors and nurses lack supplies and 77 people have died, the highest number outside China. The United Arab Emirates announced it was closing all schools for four weeks.

The death toll in Italy, Europe’s worst-affected country, jumped to 79 on Tuesday and Italian officials are considering expanding the area under quarantine. France reported its fourth coronavirus death and Iceland, Indonesia, Ukraine and Argentina reported their first coronavirus cases, taking the global total to around 80 countries.

About 3.4% of confirmed cases of COVID-19 have died, far above seasonal flu’s fatality rate of under 1%, but the novel coronavirus can be contained, the head of the World Health Organization (WHO) said on Tuesday.

“To summarize, COVID-19 spreads less efficiently than flu, transmission does not appear to be driven by people who are not sick, it causes more severe illness than flu, there are not yet any vaccines or therapeutics, and it can be contained,” World Health Organization chief Tedros Adhanom Ghebreyesus said in Geneva.

Health officials have said the death rate may be much lower if there are thousands of unreported mild cases of the disease.

The coronavirus, which emerged in the central Chinese city of Wuhan late last year, has spread around the world, with more new cases now appearing outside China than inside.

There are almost 91,000 cases globally of which more than 80,000 are in China.

China’s death toll was 2,943, with more than 125 fatalities elsewhere.

In a unanimous decision, the Fed said it was cutting rates by a half percentage point to a target range of 1.00% to 1.25%. U.S. President Donald Trump said a half point cut was not enough.

Finance ministers from the G7 group of rich countries were ready to take action, including fiscal measures where appropriate, Japanese Finance Minister Taro Aso said. Central banks would continue to support price stability and economic growth.

AGGRESSIVE CONTAINMENT

China – where new coronavirus cases have been falling sharply and the 129 cases in the last 24 hours was the lowest number reported since Jan. 20 – is increasingly concerned about the virus being brought back into the country by citizens returning from new hotspots elsewhere.

Travellers entering Beijing from South Korea, Japan, Iran and Italy would have to be quarantined for 14 days, a city official said. Shanghai has introduced a similar order.

The worst outbreak outside China is in South Korea, where President Moon Jae-in declared war on the virus, ordering additional hospital beds and more masks as cases rose by 600 to nearly 5,000, with 34 deaths.

WHO officials also expressed concerns about the situation in Iran, saying doctors lacked respirators and ventilators needed for patients with severe case of the respiratory illness.

WHO emergency program head Michael Ryan said the need in Iran was “more acute” than for other countries.

While the case numbers in Iran appear to be bad, he said, “things tend to look worse before getting better.”

The International Olympic Committee on Tuesday said the summer games in Tokyo set to begin on July 24 were still expected to happen despite Japan having nearly 1,000 coronavirus cases and 12 deaths.

In the United States, there are now 108 people in 12 states with the coronavirus and six deaths in the Seattle area.

New York state reported its second case, a man in his 50s who works in Manhattan and has been hospitalized.

Slideshow (10 Images)

The public transportation agency in New York, the most densely populated major U.S. city of more than 8 million, said on Twitter it was deploying “enhanced sanitizing procedures” for stations, train cars, buses and certain vehicles.

(GRAPHIC: Tracking the novel coronavirus – here)

Reporting by Andrea Shalal in Washington and Tetsushi Kajimoto in Tokyo; Additional reporting by Michael Nienaber in Berlin, Stephanie Nebehay in Geneva, Kate Kelland in London, Takahiko Wada in Tokyo; Writing by Robert Birsel, Nick Macfie and Lisa Shumaker; Editing by Alexander Smith, John Stonestreet and Bill Berkrot

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