Federal Reserve Cuts Rates to Near Zero in Emergency Action

The Federal Reserve declared on Sunday it would lower interest rates to zero in the wake of the coronavirus pandemic, the most dramatic cut by the central bank since the 2008 financial meltdown. 

The benchmark U.S. interest rate was set in a range of 0 to 0.25 percent, down a 1 to 1.25 percent range. In addition to the interest rate, the Fed said it would also purchase at least $700 billion in government and mortgage-related bonds, per The Washington Post. The actions will hopefully stabilize the financial markets and keep the U.S. from sliding into a recession. 

The Fed will also restart the program of “quantitative easing,” in which the central bank will purchase hundreds of billions of dollars in bonds to keep interest rates low. It will also grant larger loans to banks in the U.S., which can infuse cash into small businesses and families that require relief. 

“Economic policy experts must do what we can to ease hardship caused by the disruption to the economy,” Fed Chair Jerome H. Powell said on Sunday. “We are prepared to use our full range of tools to support the flow of credit to households and businesses.”