US Fed cuts interest rate to zero and launches quantitative easing
In an emergency statement on Sunday evening, the Fed said it decided to cut the target range for federal funds rates by half a percentage point “in an attempt to limit the impact of coronavirus on economic and financial markets.”
The US Fed combined the move with quantitative easing amounting to at least $700 billion of asset purchases in the coming months. It will do this by increasing its holdings of Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion.
Global stock markets plunged last week after the World Health Organization (WHO) declared COVID-19 a global pandemic as the spread intensified in Europe and the US.
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