US Federal Reserve Cuts Rates To Zero As Coronavirus Spreads

On an emergency basis on Sunday, the US Federal Reserve announced that it would cut its benchmark interest rate to zero and begin a new round of quantitative easing, involving the purchase of $ 700 billion in assets for Treasuries and mortgage-backed securities. The new federal funds rate, used as a benchmark for both short-term lending to financial institutions and as a peg to many consumer rates, will now target 0-0.25%, up from the previous target range of 1% to 1.25 %. The Fed also cut reserve requirements for thousands of banks to zero. The Federal Reserve said: “The coronavirus outbreak has damaged communities and disrupted economic activity in many countries, including the United States.

Stock futures fell Sunday night even after the Federal Reserve launched a massive monetary stimulus campaign to curb the slowdown in economic growth amid the coronavirus outbreak. Stock market futures have reached a 5% "marginal decline" level, which was done by the CME futures exchange to reduce panic in the markets. Dow Jones Industrial Average futures fell more than 1,000 pips, pushing the limit down. S&P 500 and Nasdaq 100 futures were also at their lower bounds.

The Fed's announcement comes after another rate cut was announced earlier this month. It also follows the market's largest one-day gain since 2008, with major averages rising more than 9% on Friday.