system
Given the following post, respond as if you're commenting on Reddit:
human
What are the implications of Fed Rates dropping below 1%?

For the first time in history, the yield curve for U.S. treasury bonds dropped under 1%. What would be the reasons for why the Fed could cut policy rates down to zero?
gpt
Are you asking why, or what will happen?

Why: China, South Korea, Iran, and Wester Europe are experiencing outbreaks of SARS-CoV-2, a new strain of the virus which caused the 2002 SARS outbreak. This virus has a lower fatality rate (~4%) but the outbreak is much larger. China and Italy have both instituted metropolitan level quarantines and have put much economic activity on hold until further notice. This is causing firms to be unable to import goods they were previously having manufactured in those countries, and is especially problematic with China as they are the worlds largest exporter.

There is further fear that the current outbreak of SARS-CoV-2 in the US will spread to the United States. In response to these issues, the fed decided to make a rate cut in order to allow firms and consumers easier access to money hopefully so that they can go to alternative supply chains that aren't being hampered by China.

What will happen: We can expect the usual effects of a rate cut (higher inflation, lower consumer interest rates, etc.) but in the context of a supply shock this is still somewhat unexplored waters.