The Federal Reserve headquarters in Washington, D.C. Photo courtesy of Dan Smith / CC BY-SA 2.0

The Federal Open Market Committee this morning cut the benchmark federal funds rate by half a percentage point in response to concerns the coronavirus outbreak could slow global markets.

The federal funds rate target now sits at a range of 1 percent to 1.25 percent.

The FOMC said in a statement that the move was made in light of risks to economic activity posed by the coronavirus and to support achieving maximum employment and price stability goals,

“The fundamentals of the U.S. economy remain strong,” the FOMC said. “However, the coronavirus poses evolving risks to economic activity.”

The FOMC added that it will closely monitor “developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.”

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles.

While financial markets had clearly expected a rate cut, many economists questioned just how big of an impact it could have on the larger American and world economies.

“From an optics perspective, maybe a rate cut makes a difference in psychology” for investors, Debbie Cunningham, chief investment officer of global liquidity markets at Federated Hermes told the Associated Press.

Citing the reduction in economic output caused by quarantined workers and supply chain disruptions caused by shuttered Chinese factories, she added, “I don’t think, on a quantitative basis, it makes a hill-of-beans difference.”

Worldwide, more than 90,000 people have been sickened and 3,100 have died. The number of countries hit by the virus has reached at least 70, with Ukraine and Morocco reporting their first cases.

U.S. markets have been hit hard by fear over the virus’ impact. Stocks surged on Monday over hopes that central banks will help shield the global economy. That followed a broad sell-off last week that erased gains for 2020 and sent indexes into a correction, or a fall of 10 percent or more from a peak.

Payments processor Visa is among the latest companies warning investors. It expects first-quarter revenue to suffer because of the damage to international travel. Chipmaker Microchip Technology withdrew its profit forecast for the year because of the uncertainty surrounding the virus’ impact.

Several companies reported earnings as the latest round of quarterly reports nears its end. Kohl’s edged higher after it raised its dividend following a surprisingly good fourth quarter. Auto parts retailer AutoZone slipped after reporting a surprising drop for a key sales measure.

The Associated Press contributed to this report.