The United States Federal Reserve, the country’s central bank, on Sunday announced drastic measures amid the worsening coronavirus outbreak in the country, AFP reported. This included slashing key interest rates to close to zero.
The US Federal Reserve made its second emergency rate cut in less than two weeks, cutting the benchmark borrowing rate to between 0% and 0.25%, and pledging to keep it there “until it is confident that the economy has weathered recent events”. The interest rate was this low last during the 2008 financial crisis.
The central bank also announced massive asset purchases. It made its discount lending windows available to banks and urged them to use it to help businesses and households. The US Fed also removed reserve requirements to allow the banks to use cash backstops. A backstop is the act of providing last-resort support or security in a securities offering for the unsubscribed portion of shares.
US President Donald Trump, who has been critical of the central bank in the past, praised the moves at a regular briefing of the coronavirus task force. “What’s happened with the Fed is phenomenal news,” Trump said. “I can tell you, I’m very happy.” Trump said he had not expected the moves and “I like being surprised”.
The US Fed coordinated its actions with those of the European Central Bank, Bank of England, Bank of Japan, Bank of Canada and the Swiss National Bank.
As of March 13, there had been 1,629 cases of COVID-19 in the US, and 41 people had died, according to the Centers for Disease Control. However, the CDC updates its figures only on weekdays.
Over 1.6 lakh people worldwide have been diagnosed with COVID-19, and over 6,500 have died.