The Fed Urgently Cuts The Interest Rate. Again. | Fundamental Analysis

The Fed Urgently Cuts The Interest Rate. Again. | Fundamental Analysis

Written by: PaxForex analytics dept - Monday, 16 March 2020 0 comments

The Fed reduced interest rate to almost zero, started buying bonds again and applied other measures of its anti-crisis list, involved world central banks in supporting the global economy, which is declining because of the coronavirus. In the short term, the negative effects of the coronavirus will harm economic activity and are also a risk to economic growth. The US regulator lowered the key interest rate range to 0.00-0.25% and added that it intends to increase the balance sheet by at least $700 billion this month. These measures will be active until the Fed is confident that the U.S. and global economies have withstood the negative effects of the coronavirus and that the economy is on track to achieve maximum employment and price stability. The U.S. Federal Reserve System has called on world banks to use the trillions of dollars in liquid assets they have accumulated since the last economic crisis to lend to businesses and households. The Federal Reserve and central banks - Canada, England, Europe, Japan, and Switzerland - have also reduced the cost of swaps to ensure that dollar liquidity is provided to financial institutions that are facing problems in credit markets. The US Congress passed a bill this weekend to provide paid sick leave to several categories of workers and the authorities are also considering additional measures to support the business. Due to the pandemic, last week the financial markets were experiencing multidirectional jumps, there were signs of lack of liquidity, and investors have concerns about defaults due to company failures. The Fed's planned meeting was expected this week, but the situation due to the coronavirus has demanded from the U.S. regulator to take irrevocable actions. Despite the measures taken by the Fed, futures on US stock indices continue to decline at the beginning of the week (4%).