Coronavirus us in emergency rate cut as coronavirus spreads
You're referring to the emergency rate cut by the US Federal Reserve in response to the COVID-19 pandemic.
On March 3, 2020, the Federal Reserve announced an emergency rate cut, reducing the federal funds target rate by 1.0 percentage point to a range of 1.00% to 1.25%. This was the first rate cut since 2008, during the global financial crisis.
The rate cut was intended to help mitigate the economic impact of the COVID-19 pandemic, which was spreading rapidly around the world at the time. The Fed's action was aimed at:
- Supporting economic growth: By reducing borrowing costs, the Fed hoped to encourage consumers and businesses to spend and invest, which would help maintain economic activity.
- Stabilizing financial markets: The rate cut was also intended to calm financial markets, which were experiencing significant volatility due to the pandemic.
- Providing liquidity: The Fed increased the amount of liquidity in the financial system by injecting more money into the economy, making it easier for banks to lend and for businesses to access credit.
The emergency rate cut was followed by additional measures, including:
- Quantitative easing: The Fed began purchasing Treasury securities and mortgage-backed securities to further inject liquidity into the financial system.
- Forward guidance: The Fed provided guidance on its future monetary policy, indicating that it would keep interest rates low for an extended period to support the economy.
- Emergency lending facilities: The Fed established emergency lending facilities to provide loans to banks, businesses, and other organizations affected by the pandemic.
These measures helped to stabilize the US economy and financial system during the pandemic, and the Fed continued to take additional actions as needed to support the recovery.