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Coronavirus: US slashes rates and launches huge stimulus programme

The US has cut interest rates to almost zero and launched a $700bn stimulus programme in a bid to pr..

By admin , in Women , at March 16, 2020

The US has cut interest rates to almost zero and launched a $700bn stimulus programme in a bid to protect the economy from the impact of coronavirus.

It is part of a co-ordinated action announced on Sunday in the UK, Japan, eurozone, Canada, and Switzerland.

Announcing the US move, the Federal Reserve said the "outbreak has harmed communities and disrupted economic activity in many countries".

Fed chairman Jerome Powell will hold a news conference later on Sunday.

US President Donald Trump said the Fed's action "makes me very happy".

The Fed has cut rates to a target range of 0% to 0.25%, and said it would it begin buying bonds – quantitative easing – a move that pumps money directly into the economy.

The central bank had already cut interest rates by half a percentage point after an emergency meeting on 3 March. It was the first rate cut outside of a regularly scheduled policy meeting since the financial crisis in 2008.

Stock markets have plunged over recent days amid fears that economic paralysis will wipe out corporate profits and spark a global recession.

But early indications suggest the Fed's move may not shore up financial markets. US stock market futures, which anticipate the direction of shares when trading begins, were almost 4% down.

'Kitchen sink'

In a statement on Sunday, the Fed said: "The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals."

As part of Sunday's announcement, the Fed will work with other central banks to increase the availability of dollars for commercial banks. These so-called currency swap lines were an important tool in maintaining financial stability after the 2008 banking crisis.

"Today's coordinated action by major central banks will improve global liquidity by lowering the price and extending the maximum term of US dollar lending operations," Bank of England Governor Mark Carney said in a joint statement with Andrew Bailey, who succeeds him as BoE chief on Monday.

Michael Hewson, Read More – Source