The Federal Reserve cut interest rates to nearly zero on Sunday, an emergency move that represented its second attempt to stimulate an economy that has been ravaged by the coronavirus pandemic.
By making borrowing as cheap as possible, the central bank is hoping that businesses and individuals will have ready access to nearly interest-free cash for investment and spending.
After Sunday’s move, the new borrowing rate range is between 0 and 0.25 percent.
The Fed’s Open Market Committee issued a statement saying the rate would stay low “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
It said it was taking the action because “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States.”
The Fed cut rates by half a percentage point on March 3, the first emergency rate cut since the financial crisis.
Sunday’s move follows an ugly week on Wall Street, with the Dow and the S&P both entering bear market territory and the Dow seeing its biggest one-day drop. Investors were responding to mounting fears that the viral pandemic will take a heavy toll on the nation’s economy, with stores, businesses, and schools all closing and industry and sporting events canceled.
President Donald Trump has been urging the Fed to cut its rates, and at a news conference Sunday afternoon, he said the move made him “very happy.”
Amid widespread sentiment among traders that the White House had dragged its heels on addressing the virus, Treasury Secretary Steven Mnuchin said Sunday that Trump has “instructed” him to do whatever is needed to combat the outbreak and deal with the economic impact.
Fed Chairman Jerome Powell is scheduled to deliver a press conference at 6 p.m. Sunday.