The American Central bank cut its benchmark interest rate to near zero in reaction to coronavirus pandemic
The US Federal Reserve cut its benchmark interest rate to near zero. From now on, the interest rate is from 0 to 0,25%. The cut represents 1% decline, that is 100 basic points. It’s one of the most dramatic decisions to be executed since 2008 financial crisis.
But it’s not all yet. American Central Banker also announced that they will buy securities in volume of $700 billion. The Fed returns to quantitative easing, which is policy implemented to increase liquidity in financial market.
Fed committee met exceptionally on Sunday, only few days before their actual meeting. “Available data show that American economy enters a period full of challenges but is in a good state,” the Fed committee said in a statement. The measures seem to be rather preventive with the aim to slow down or stop expected economic recession. It’s already clear that coronavirus pandemic will leave huge economic impacts globally, the U.S. included.
