The Fed Has Sharply Reduced Interest Rates. The Benchmark Interest Rate Has Dropped To Near Zero.

The US Federal Reserve announced on 15 March that the target range of the federal funds rate should be lowered to zero to 0.25%.

The Federal Reserve announced on Sunday that it will reduce its benchmark interest rate to near zero and launch a new round of quantitative easing of $700 billion to cope with the impact of the COVID-19 virus on the US economy.

The Fed said in a statement that the spread of the COVID-19 virus has disrupted the economic activities of many countries, including the United States, and the global financial situation has been seriously affected. The impact of the virus will put pressure on economic activity in the short term and pose a risk to the economic outlook. In view of this, the Federal Reserve decided to reduce the target range of the federal funds rate to 0 - 0.25 percentage points until it was convinced that the US economy had stood the test and was expected to achieve its maximum employment and price stability target.

In conjunction with the interest rate cut, the Fed also announced a massive $700 billion quantitative easing plan. The Fed is also prepared to use its tools to support credit flows to households and businesses. In the coming months, it will increase US $500 billion in US Treasury bonds and $200 billion in institutional mortgage-backed securities, and will start buying 40 billion dollars from Monday.

After the Federal Reserve announced its interest rate cut, the three major stock index futures fell and Dow futures fell 1000 points. As of 6:30 am Beijing time 16, the three major stock index futures fell more than 4.5%.

It is worth noting that this is the second time the Federal Reserve cut interest rates this month. Earlier, on the night of March 3rd in Beijing, the Federal Reserve announced a 50 point cut in interest rates to 1.00%-1.25%, the largest rate cut since the Federal Reserve in 2008, in order to combat the economic impact of the new crown pneumonia epidemic. At the same time, the excess reserve ratio (IOER) will be reduced by 50 basis points to 1.1%.

After the financial crisis in 2008, the Fed launched at least three rounds of quantitative easing. The first round of quantitative easing, which is the most critical time of the financial system, the fed directly bought "two housing" debt and its mortgage-backed securities, which supported the credit of financial institutions and stabilized the market in time.