The Federal Reserve announced on Sunday it would drop interest rates to zero and buy at least $700 billion in government and mortgage-related bonds as part of a wide-ranging emergency action to protect the economy from the impact of the coronavirus outbreak.
The moves, the most dramatic by the U.S. central bank since the 2008 financial crisis, are aimed at keeping financial markets stable and making borrowing costs as low as possible as businesses around the country close and the U.S. economy hurtles toward recession.
The Fed, led by Chair Jerome H. Powell, effectively cut its benchmark by a full percentage point to zero. The benchmark U.S. interest rate is now in a range of 0 to 0.25 percent, down from a range of 1 to 1.25 percent.
In addition to rate cuts, the Fed announced it is restarting the crisis-era program of bond purchases known as “quantitative easing,” in which the central bank buys hundreds of billions of dollars in bonds to further push down rates and keep markets flowing freely….
President Trump, who has been relentlessly pushing the central bank to take more action, congratulated the Fed and said its decision to lower interest rates “makes me very happy.”
Layoffs have already begun across the country as large and small businesses see a dramatic decrease in sales. The Dow Jones industrial average remains in bear market territory after the swiftest 20 percent plunge in U.S. stock market history. …
Stock futures slumped after the Fed’s announcement with the Dow Jones industrial average set to open down more than 1,000 points on Monday. …
The Fed bank also announced joint action with other central banks around the world. The Fed is extending U.S. dollar swap lines to other key nations, including Japan, England, Europe, Canada and Switzerland to ensure those nations have enough dollar reserves on hand. This is another move out of the Fed’s 2008 emergency playbook.