How the Fed responds to crisis

The Federal Reserve announced Tuesday morning it’s making an emergency half percentagepoint rate cut, as fears continue to mount about the global spread of COVID-19. Marketplace host Kai Ryssdal spoke to Daniel Tarullo, a former member of the Federal Reserve’s Board of Governors and professor at Harvard Law School, about what the central bank’s decision process may have been like.

“The mood was probably a fairly somber one,” Tarullo said. “I suspect a lot of preliminary discussions were held last week.”

Despite the rate cut, the Dow fell 700 points today. Tarullo said the market reaction implies that the Fed’s announcement may have further worried people about the severity of COVID-19.

Click the audio player above to hear the interview.