The US Federal Reserve has reported this March 15 that it will lessen interest rates to very nearly zero. As one of the planned money related strategy gauges that it will apply to balance the monetary effect of the coronavirus pandemic.
A Fed proclamation said that the impacts of the coronavirus would burden monetary action for the time being and present dangers to the financial standpoint. Considering these occasions, the Committee had chosen to decrease the objective range.
In this sense, the agency reduced rates to a target range of 0% to 0.25% and announced that it would expand its balance sheet by at least $ 700 billion in the coming weeks.
Fed said they would like to keep up this objective range until it’s sure that economy has withstood recent events. And is on target to meet its greatest business and price stability targets.
Among other measures announced Sunday night, the Fed encouraged banks to lend to companies and households. Banks whose accounting reports and lives have been altered by the infection; the trillions of dollars in stocks, and liquid assets accumulated as buffers of capital.
Likewise, the Fed and five other foreign central banks; the Bank of Canada, the European Central Bank, the Bank of Japan, the Bank of England. And the Swiss National Bank— reduced prices on their lines of exchange in the financial crisis to facilitate the supply of dollars to entities that are facing the stress of credit markets.
The Fed had already cut interest rates 0.5% on March 3 in an emergency meeting; it turned out to be the first-rate cut outside of a scheduled policy meeting since the 2008 financial crisis.
US President Donald Trump called this good news that made him happy. Trump said at a press conference that it was excellent news. It was great for the country.
In late February, amid a drastic drop in the stock market, Fed President Jerome Powell said that at that time, “the fundamentals of the United States economy were still strong.”
At the same time, he recognized that “the coronavirus presents evolutionary risks for economic activity.” In this context,
He concluded that he would use his tools and act as appropriate to support the economy.