The Federal Reserve acts fast and strong.
After days of insistent pressure from the president, the US Federal Reserve (Fed) has finally announced this Sunday that it lowers interest rates to 0% and injects 700,000 million dollars (625,000 million euros) into the economy to alleviate the effects that the coronavirus crisis is having.
The Fed has coincided its announcement with the press conference scheduled for this Sunday by the White House crisis team for the coronavirus, which was attended by surprise by Donald Trump himself. “This is great news,” said the president. “The markets must be very happy,” he added, smiling.
As the Fed (US central bank) has admitted in a statement, “the coronavirus outbreak has damaged sectors and economic activity in many countries, including the US.” It is exactly the argument that Trump had made hours before, regretting that the Fed was following suit, instead of leading in a time of crisis.
On Saturday, the president even threatened to fire Fed chief Jerome Powell in a campaign of maximum pressure. “I think I have the right to take him away, to put someone else in charge, even though I haven’t made a decision,” the president said in another appearance in the White House press room.
The Fed’s measures include cutting emergency loan rates for banks by 125 basis points, up to 0.25%, and extending the repayment period by up to three months.
Likewise, the Fed lowers the reserve requirement ratio for banks to zero and expands liquidity in dollars internationally, in collaboration with other central banks in Canada, England, Japan, the EU and Switzerland.
It also offers 500,000 million in public debt and 200,000 million in mortgage debt that will begin to be issued from Monday.
It is the US central bank’s urgent response to a crisis that has caused very worrying fluctuations in the markets, including a 10% drop in the Dow Jones index on Thursday, the worst since 1987.