Federal Reserve made an emergency announcement Sunday afternoon

CrisisInvesting

The Federal Reserve made an emergency announcement Sunday afternoon by announcing that it would be cutting interest rates to zero for the first time since the financial crisis.

The central bank said it will use its “full range of tools” to battle the economic impacts of the novel coronavirus and announced quantitative easing in the form of at least $700 billion of asset purchases.

“The actions we have announced today will help American families and businesses, and indeed, our entire economy weather this difficult period and will foster a more vigorous return to normal once the disruptions from the coronavirus abate,” Fed Chairman Jerome Powell said in a statement.

Powell said the U.S. economy appeared to have “strong footing” ahead of the coronavirus outbreak, but said the negative impact to key industries like travel, leisure, and hospitality “means that the second quarter [of growth] is probably going to be weak.”

The Fed chairman said Congress and the White House will ultimately have to address the health implications of the crisis, adding that only fiscal policy can “direct relief to particular populations and groups.”

Powell reiterated several times in a Sunday night press conference that the actions are designed to motivate banks to support businesses, as quarantines around the country raise concerns that businesses will have to close their doors and possibly lay off workers.

Powell said lowering rates to zero "will matter to borrowers who will get some relief from our cuts, but they’ll matter a lot more when the economy begins to recover."

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rate become 0;
new round of QE starts