The US central bank has slashed interest rates in response to mounting concerns about the economic impact of the coronavirus.
The Federal Reserve lowered its benchmark rate by 50 basis points to a range of 1% to 1.25%.
The emergency move comes after the G7 group of finance ministers pledged action earlier on Tuesday.
It follows warnings that slowdown from the outbreak could tip countries into recession.
Federal Reserve Chair Jerome Powell said the US economy remains strong but it is difficult to predict the “magnitude and persistence” of the effects of the spreading virus.
“The virus and the measures that are being taken to contain it will surely weigh on economic activity for some time, both here and abroad,” he said at a press conference in Washington.
“We don’t think we have all the answers. But we do believe that our action will provide a meaningful boost to the economy.”
The last time the bank made an interest rate cut at an emergency meeting was during the global financial crisis of 2008.
The unanimous decision is a “dramatic turnaround from last week”, when many Fed officials appeared confident that rates, already low by historical standards, would not need to be cut further, said Paul Ashworth, chief US economist at Capital Economics said.
“With financial markets in turmoil and evidence growing that the coronavirus is developing into a pandemic, the Fed’s change of heart is entirely understandable,” he said.
Mr Powell said the bank believed the rate cut would help strengthen consumer and business confidence, and keep money flowing.
Many analysts in recent days had said they expected the Fed to act.
However, Peter Tuchman, a stock trader at Quattro Securities, said he did not think financial markets would necessarily welcome the move. “They’re doing it to support the markets but that makes people fearful that we must be in bad shape,” he told the BBC.
“To pull that bullet out so fast and so furiously leaves us with not that much ammo,” he said.