The US Federal reserve lowered its base rate to almost zero
The us regulator is taking measures to protect the economy from the effects of coronavirus.
The us Federal reserve, which serves as the country’s Central Bank, cut its benchmark interest rate by one percentage point to 0-0. 25 % at an emergency meeting on March 15. This is stated in the report of the regulator.
“The Committee expects to maintain this target range until it is confident that the economy has withstood recent events and is on track for maximum employment and price stability targets,” the fed’s management said in a statement.
This is the second reduction in the base rate since March 3, when it was lowered by 0.5 percentage points to 1-1. 25 %.
Lowering the base rate and increasing the portfolio of government and mortgage bonds resemble the emergency actions of the fed during the 2008 crisis, writes the Associated Press. Then the fed cut the key rate to almost zero and kept it at this level for seven years.
The Federal reserve will also buy $ 500 billion in US government bonds and $ 200 billion in mortgage bonds.
The fed, together with the Bank of England, the European Central Bank, the Bank of Canada, the national Bank of Switzerland and the Bank of Japan, made a coordinated decision to reduce the rate on swap lines in dollars by 25 basis points.
US President Donald trump welcomed the fed’s decision to lower its key rate amid the spread of the coronavirus. “I congratulate the fed on this. This is great for our country, ” the President said. Earlier, trump repeatedly called on the fed to lower the interest rate even more.
