Fed Cuts Benchmark Rate to Zero, Launches Massive $700 Billion QE Program
For the second time in less than two weeks, the U.S. Federal Reserve (FED) cut its benchmark interest rates on Sunday, hoping the emergency move would help shore up the U.S. economy amid the rapidly escalating global coronavirus pandemic.
The Fed also launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus.
In a statement, the Fed said it was cutting rates by 50 basis points to a target range of 0% to 0.25%.
“The effects of the coronavirus will weigh on economic activity in the near-term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range,” the Fed said in a statement.
“The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals,” the Fed said.
The move was considered an emergency because policymakers are not scheduled to meet until March 17-18.
Bullish for Foreign Currencies
The move by the Fed drove down U.S. Treasury yields, erasing the impact of last week’s moves by the central bank to shore up the financial markets. Lower yields weakened the dollar against all major currencies.