The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to near-zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus.
Facing highly disrupted financial markets, the Fed also slashed the rate of emergency lending at the discount window for banks by 125 bps to 0.25%, and lengthened the term of loans to 90 days.
The new fed funds rate, used as a benchmark both for short-term lending for financial institutions and as a peg to many consume rates, will now be targeted at 0%-0.25%.
The Fed also cut reserve requirement ratios for thousands of banks to zero. In addition, in a global coordinated move by centrals banks, the Fed said the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank took action to enhance dollar liquidity around the world through existing dollar swap arrangements.
10 thoughts on “Federal Reserve Cuts Rates To Functional Zero”
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I can’t wait for the populist hot takes!Report
“Now’s the time for a massive infrastructure bill.”Report
We had to burn the village to save it.Report
What’s the price o’ gold looking like?Report
Don’t know about gold, but bitcoin is seriously tanking. Maybe people are cluing into the reality that it isn’t really money and isn’t really worth anything.Report
I hear ya, but a wise investor would buy the Bitcoin dip, regardless of whether it’s real money or not. The resiliency of that “currency” over time shows that it will peak again at a price which will leave “rational investors” shaking their heads.Report
Down about $30 from last week. (Still over $1500, though.)Report
Up 22% since 2016… not really spiking, but Gold has been steady around $1200 since 2014. It spiked in 2011 to $1,900… but has been somewhat steady since then. In 2007 it was a mere $650.
Not really seeing a flight to gold at this point.
I have no problem with people having a stash of gold/silver (full disclosure, I have some)… and, as a part of a broad wealth management program, it works very well… assuming we’re talking real wealth here.
It’s the broad middle of regular folks panic buying that’s the worst use scenario.Report
And…it’s under $1500.Report
When you shred all the tools except interest rates as a mechanism to deal with a deflating economy . . .Report