March 16, 2020 Comments Off on Fed Cuts Interest Rate to Near Zero Views: 790 National News

Fed Cuts Interest Rate to Near Zero

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The Federal Reserve on Sunday cut the federal funds rate to near zero in an emergency move in response to the coronavirus outbreak. The Fed also announced that it will buy at least $700 billion in bonds over the coming months.

“The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook,” according to a statement from the Fed’s Federal Open Market Committee (FOMC). In light of these developments, the FOMC voted to lower the target range for the federal funds rate to between 0 and ¼%.

This target range will remain in place until the FOMC is confident that “the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals,” according to the statement.

The FOMC will increase its holdings of Treasury securities by at least $500 billion, and its holdings of agency mortgage-backed securities by at least $200 billion. The committee will also reinvest all principal payments from the Fed’s holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.

“In addition, the Open Market Desk has recently expanded its overnight and term repurchase agreement operations,” the statement said.

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