Fed Declares an Emergency Rate Cuts to 0% with a Massive $700bn QE to Support Economy

The Federal Reserve made an emergency rate cuts on Sunday to zero and launched a $700 billion quantitative easing program to shelter the economy from the disruption of the coronavirus outbreak.

 

“The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” said the Fed on the decision of a rate cut from a previous target range of 1%-1.25% to 0%-0.25% on Sunday.

 

The Fed also slashed the rate of emergency lending at the discount window for banks by 125 bps to 0.25%, and extended the term of loans to 90 days.

However, Fed Chairman Jerome Powell said that cutting the rate below zero is not an “appropriate” policy for the U.S.

 

Despite the rate cut, Dow Jones Futures fell 1,045 points or 4.58%, pointing to a decline in the Wall Street on Monday.