Fed Cuts Benchmark Rate to Zero, Launches Massive $700 Billion QE Program

For the second time in less than two weeks, the U.S. Federal Reserve (FED) cut its benchmark interest rates on Sunday, hoping the emergency move would help shore up the U.S. economy amid the rapidly escalating global coronavirus pandemic.

The Fed also launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus.

In a statement, the Fed said it was cutting rates by 50 basis points to a target range of 0% to 0.25%.

“The effects of the coronavirus will weigh on economic activity in the near-term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range,” the Fed said in a statement.

“The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals,” the Fed said.

The move was considered an emergency because policymakers are not scheduled to meet until March 17-18.

Bullish for Foreign Currencies

The move by the Fed drove down U.S. Treasury yields, erasing the impact of last week’s moves by the central bank to shore up the financial markets. Lower yields weakened the dollar against all major currencies.

At 22:51 GMT, the EUR/USD is trading 1.1186, up 0.0081 or +0.73%. The GBP/USD is at 1.2418, up 0.0.125 or +1.02% and the USD/CAD is at 1.3753, down 0.0054 or -0.39%.

The AUD/USD is trading .6244, up 0.0066 or +1.08% and the NZD/USD is at .6100, up 0.0032 or +0.57%.

The safe-haven Swiss Franc is at .9467, up 0.0048 or +0.50% and the Japanese Yen is trading 107.211, down 0.808 or -0.75%.