The Federal Reserve’s benchmark US interest rate was slashed on Sunday to a range of 0 to 0.25 percent, down from a range of 1 to 1.25 percent. The move – that has been much-anticipated by US President Donald Trump – is a bid to tackle the ongoing economic fallout caused by the spread of the Chinese-spawned coronavirus.
The central bank also announced that it would re-start its “quantitative easing” – a step that the American economy took earlier during 2008’s Great Recession in a bid to get money flowing in markets.
According to the US central bank, the imposed emergency rate cuts would expand its balance sheet by at least $700 billion in the coming weeks. American banks – affected by the pandemic – will also receive a boost.
“This action eliminates reserve requirements for thousands of depository institutions and will help to support lending to households and businesses”, the Fed said in the statement.
Trump has welcomed the Federal Reserve’s move during the news conference.
Trump has reportedly been pushing the Fed to do more to boost markets and prevent the economy from falling into a possible recession amid the outbreak of the Chinese coronavirus.
Instant Reaction in Global Markets
According to official data, most markets had yet to open in Asia, but currencies were active, with the US dollar falling. The pound-dollar pair showed a rise to 1,1 after the Fed announcement. The Dollar-yen pair has fallen to 1 percent.
Dow Jones Industrial Average futures were down by more than 1000 points. S&P 500 futures were lower by more than 4 percent. Nasdaq-100 futures fell 4 percent.
Gold futures have risen almost 3,5 percent. Overall stock market futures hit levels of 5 percent lower – a move reportedly designed by the CME futures exchange to ease possible panic in global markets.
Intercontinental Exchange (ICE) futures market also reacted to the Fed’s move and displayed the dramatic fall of Brent oil price by 6.1 percent to 31.9 and WTI by 5.2 percent to 30.15 percent.
The ongoing Wuhan coronavirus pneumonia-type infection pandemic has impacted oil prices and the global economy, prompting authorities to allocate billions to markets as an emergency measure.
Sourse: sputniknews.com
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