After the Federal Reserve’s interest rate decision, oil prices tumbled. Following the U.S. central bank’s announcement that it had lowered its policy rate to the 0–0.25% range in response to the Covid-19 pandemic—and indicated that further easing could follow—oil markets reacted sharply downward.
Overall, crude prices fell by roughly 3%. Brent crude dropped about 3.40%, slipping to $32.66 per barrel. West Texas Intermediate (WTI) crude also fell, declining around 2.02% to about $31.09 per barrel.
What Did the Fed Chair Say About the Rate Cut?
Federal Reserve Chair Jerome Powell stated that, at this time, negative interest rates are not necessary and he does not believe such a move would be an appropriate policy for the United States. His remarks came alongside the Fed’s emergency rate cut and the suggestion that additional actions could be taken if economic conditions worsen.
The Fed’s decision and Powell’s comments contributed to the immediate drop in oil prices: Brent fell roughly 3.40% to $32.66 per barrel, and WTI eased about 2.02% to $31.09 per barrel. In related developments, the European Central Bank (ECB) announced that major central banks are coordinating their efforts to mitigate the economic impact of the Covid-19 outbreak, signaling a broader push by policymakers to support global financial stability as demand concerns weigh on energy markets.