In an emergency move to help the U.S. economy weather the coronavirus pandemic, the Federal Reserve today cut interest rates to almost zero — setting its benchmark to the range of 0% to 0.25%.
“The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” the Fed said in a statement. “The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. “
This is the second time the Fed has slashed rates over the past two weeks. On March 3, the rate was lowered by half a percentage point to the range of 1% to 1.25%, the first cut of its kind since the 2008 financial crisis.
In the U.S., confirmed cases of the coronavirus have climbed to over 3,200, with more than 90 deaths recorded. Globally, over 162,000 cases of the virus have been confirmed, with over 6,000 fatalities.
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Global stock markets have been in a state of flux amid the coronavirus outbreak, with the Dow Jones Industrial Average gaining or losing 1,000 points seven times in just 11 days. On Thursday, the market saw its worst trading day since the Black Monday crash of 1987, with the Dow down about 20% from its record high. However, the Dow saw its largest-ever per-point gain on Friday, rising by more than 9% alongside the other two major U.S. benchmarks, the S&P 500 and the Nasdaq Composite.
The Fed also today launched a $700 billion quantitative easing program as it attempts to protect the U.S. economy from sliding further amid the coronavirus outbreak. It 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.
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