U.S. central bankers were scheduled to gather March 17-18 in Washington. Tuesday was the first time it had cut by more than 25 basis points since 2008.

The reduction marks a stark shift for Powell and his colleagues. They had previously projected no change in rates during 2020, remaining on the sidelines during the election year, after lowering their benchmark three times in 2019 to a range of 1.5% to 1.75%.

As recently as last week, some officials, including Vice Chairman Richard Clarida, had indicated they thought it was too soon to respond to the virus. They pledged to monitor the situation, but argued monetary policy was already easy and the fundamentals of the economy strong with unemployment near a 50-year low.

But as the number of reported cases of the virus rose around the world in recent days and the U.S. reported its first fatality, traders increasingly bet the Fed would step in. Powell seemed to cement that view with a promise on Friday to “act as appropriate,” which lent some support to stocks.

Lower rates do little for factories lacking needed materials from abroad and are unlikely to spur consumers to shop if they’re scared of infection. But they should support consumer and business sentiment as well as ease financial conditions by making debt payments easier to manage and by calming market volatility.

Powell has staked his chairmanship on sustaining the expansion, words he has used to describe the essential mission of the Federal Open Market Committee, the Fed’s rate-setting panel. Despite the limited ability of monetary policy to ease the impact of a public health emergency, the rate cut could support consumer and business sentiment.

Lawmakers are working on a $7.5 billion virus response bill, another reminder that critical fiscal policy can take weeks to move through Congress.

No Silver Bullet

One lesson Fed officials will take away from this moment is how rapidly their policy space is used up in a crisis.

Total cuts of one percentage point this year, which several Wall Street firms are forecasting, would bring the bottom range of the Fed policy rate down to 0.5%. If the virus impact is worse than expected, or if the economy is hit by a separate shock, the policy rate could strike zero.