Coronavirus impact: Fed Reserve slashes rates to zero to balance economic emergency
Initiating emergency action, the Federal Reserve slashed its benchmark interest rate to a near-zero development owing to a Coronavirus outbreak on Sunday afternoon. It said it would buy $700 billion in Treasury and mortgage bonds. The Federal’s action has raised concerns that the outbreak will depress economic growth in the ensuing months.
The Federal Reserve slashed its key rate between zero and 0.25%, like in the days of the 2008 global financial crisis. It added that the decision to slash the interest rate is an effort to ask the market for the benefit of banks and investors. The Central Bank also clarified that it was equipped with a ‘full range of tools’ to battle the economic impacts of the deadly disease and announced quantitative easing.
Fed Chairman Jerome Powell through a statement said, “The actions we have announced today will help American families and businesses, and indeed, our entire economy weather this difficult period and will foster a more vigorous return to normal once the disruptions from the Coronavirus abate.”
Later, while addressing media persons, Powell said that the actions would motivate banks to support businesses, as quarantines around the country raise concerns that businesses will have to close their doors and possibly lay off workers.