US Federal Reserve slashes key interest rate to almost zero in wake of economic impact of COVID-19

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International News

Mar 16, 2020

10:20AM

US Federal Reserve slashes key interest rate to almost zero in wake of economic impact of COVID-19

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The US Federal Reserve slashed the key interest rate to virtually zero in response to the growing economic impact of the new coronavirus.

The Fed made its second emergency rate cut in less than two weeks last night, cutting the benchmark borrowing rate to a range of 0-0.25 percent.

The rate was previously at this level during the 2008 global financial crisis. The Fed pledged to keep the rates low until it is confident that 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.

President Donald Trump welcomed the steps taken saying it was phenomenal news.

The Fed joined forces with other major central banks to guarantee the global financial system has enough cash to continue to operate.

The action was coordinated with the European Central Bank, Bank of England, Bank of Japan, Bank of Canada and the Swiss National Bank.