They have also launched a $700 BILLION quantitative easing program.
In a sign of mounting economic concern amid the Coronavirus Crisis, the US Federal Reserve has dropped interest rates to zero.
That means the US central bank is out of ammunition in terms of rates, unless they take the unprecedented step of introducing negative interest rates.
Meanwhile, the Fed will undertake a $700 Billion USD quantitative easing program, purchasing Treasurys and mortgage-backed securities.
Following the move, Dow Futures tumbled, down over 1,000 points before reaching the ‘limit down.’
The Fed also took action to increase lending to banks, as reported by CNBC:
“Facing highly disrupted financial markets, the Fed also slashed the rate of emergency lending at the discount window for banks by 125 basis points to 0.25%, and lengthened the term of loans to 90 days.”
The move by the Fed shows their seriousness in attacking the crisis and keep money flowing through the system. It is expected that many other central banks will follow suit.
US President Donald Trump comments on the interest rate cut:
Spencer Fernando
Photo – Twitter
