Fed Takes Measures to Offer Support Amid Coronavirus

17 Mars, 2020, 04:41 | Auteur: Auguste Feret
  • Fed Takes Measures to Offer Support Amid Coronavirus

In the US, the Federal Reserve slashed its benchmark interest rate to zero and launched a massive quantitative easing program.

Also, traders probably also realize that the Fed's move to cut the FFR to near zero now than do it over time through a number of smaller cuts shows that it must be very anxious about the USA economy.

The US Federal Reserve has cut its key interest rate to virtually zero and launched a massive $700 billion quantitative easing programme. The central bank also urged banks to supply credit to the economy through the elimination of reserve requirements and by allowing financial firms access to capital.

The Bank of Canada, Bank of England, Bank of Japan, European Central Bank, Federal Reserve and Swiss National Bank announced a coordinated action to enhance the provision of liquidity via the standing USA dollar liquidity swap line arrangements.

Donald Trump congratulated the Fed's moves and called them "terrific" and "very good news". "It makes me very happy", the president said.

"The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals", the Federal Reserve said in a statement, adding that the COVID-19 pandemic has "harmed communities and disrupted communities in many countries".

The Federal Reserve expects to maintain the low interest rates until the United States economy recovers from COVID-19's hold.

EU and UK call off face-to-face trade talks because of virus
Face-to-face negotiations on the future relationship were scheduled to be held in London next week but were cancelled because of Covid-19.

S. Korea reports 74 new coronavirus infections
Other major provinces and cities have also reported some infections, with Gyeonggi Province reporting 20 additional cases. South Korean soldiers disinfect Daegu after a second cluster of cases linked to a religious group emerged.

Pompeo warns China against 'outlandish rumors' on coronavirus
In response, the USA conducted strikes against pro-Iranian militia Kata'ib Hezbollah's weapons storage sites in Iraq. The Iraqi military said several Iraqi air defence servicemen were critically wounded.

"The glib answer is that "this was already priced in" - and to some extent the rate cut and eventual return to QE were anticipated", said Ian Lyngen, head of USA rates strategy at BMO Capital Markets.

Former Bank of England board member Adam Posen told AFP central banks are showing they have learned the lessons from the last crisis: "Don't wait for the data".

"We have to be realistic that there's a limit on what monetary policy can achieve in this environment", he said, while praising the Fed's signal to banks that they should not just sit on their cash.

Although the Fed's actions increases liquidity and makes it easier for USA businesses and households to obtain loans, most traders probably understand that the COVID-19 crisis is more of a health crisis than a financial crisis (even though the former can cause the latter) and such actions by the world's central banks are unlikely to be very effective in reducing COVID-19's impact on the global economy since nearly every kind of business will be negatively affected by the lockdowns and travel bans being announced all over the world.

In a return of quantitative easing, the Fed plans to buy $500bn of USA government bonds and $200bn of mortgage-backed securities to smooth over market disruptions that have made it hard for banks and large investors to sell Treasuries.

Fed policymakers made an emergency half-point rate cut about two weeks ago and were set to meet Tuesday and Wednesday for a regularly scheduled meeting, when analysts expected more action to be taken.

Conseillé:



Populaire

AMC Theatres to limit attendance to 50 people per showing
Festivals, including South by Southwest in Austin, Texas, and the Tribeca Film Festival in NY , have been canceled or delayed. But the largest chains in North America - AMC, Regal Cinemas and Cinemark - have tried to keep their doors open.

Heineken Champions Cup quarter-finals postponed
The Pro14 and France's Top 14 leagues were suspended indefinitely last week, with four global matches in the 2020 Six Nations Championship postponed because of the spread of COVID-19.

Tom Hanks, Rita Wilson reportedly out of hospital
ROBBIE WILLIAMS has quarantined himself in a separate Californian mansion to his wife Ayda Field. "Hello, folks. Field, 40, and the couple's four children are "social distancing" at their Malibu estate for two weeks.

Ontario health officials introduce new coronavirus guidelines
As of Sunday, there were 145 coronavirus cases in the province, five of which have been resolved. Ford has already announced a $100-million contingency fund for health costs.

COVID-19: une école secondaire de Lévis et son personnel en isolement
Un cas de contamination à la COVID-19 s'ajoute au bilan dans Chaudière-Appalaches, trois depuis les 24 dernières heures. Sur les cas confirmés, l'un d'eux provient de ce milieu scolaire et la santé publique a décidé d'agir.

Donovan Mitchell spoke to ‘GMA’ on his recovery from coronavirus
Mitchell said that the testing for COVID-19 was incredibly uncomfortable, but he's appreciative he was able to get tested. The virus has been blamed for more than 60 deaths through Sunday in the U.S. alone, and more than 6,500 worldwide.

349 new Covid-19 deaths take Italy total to over 2000
Italy's proportion of fatalities to confirmed cases of the new coronavirus infection is now higher than that of China. More than 24,700 people in the country have been diagnosed with the disease and more than 1,800 people have died.

Gobert sorry for not taking coronavirus more seriously
The NBA had already suspended the season hoping for action to resume once all security goals for fans and players are met. I have been feeling better every single day.

Arnold Schwarzenegger's adorable mini pony and donkey want you to #StayTheFHome
The amusing clip sees the film star telling his nonplussed pet pooch: 'Look at this Cherry, this is how you wash your hands. Watch below and you'll feel immediately at home with the gang beside his cabinet of knick knacks.

All bars, restaurants to close to dine-in customers in IL
Andrew Cuomo announced public schools in New York City and surrounding counties are set to close. DeWine wasn't the only government official to announce closures of bars and restaurants.