Faced with a growing economic shutdown from the coronavirus pandemic, the US Federal Reserve on Sunday announced drastic emergency measures to shore up confidence and keep the financial sector running, including slashing the key interest rate to virtually zero.
The Fed made its second emergency rate cut in less than two weeks, cutting the benchmark borrowing rate to a range of zero to 0.25 percent, where it was during the 2008 global financial crisis, and pledged to keep it there “until it is confident the economy has weathered recent events.”
The central bank also announced massive asset purchases, opened its discount-lending windows to banks and urged them to use it to help businesses and households.
It also removed bank reserve requirements to allow them to use cash backstops. The action was coordinated with the central banks in England, Switzerland, Europe, Japan, and Canada.