Posted on 03/15/2020 2:12:17 PM PDT by billyboy15
The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus.
Facing highly disrupted financial markets, the Fed also slashed the rate of emergency lending at the discount window for banks by 125 bps to 0.25%, and lengthened the term of loans to 90 days.
The Fed also cut reserve requirement ratios for thousands of banks to zero. In addition, in a global coordinated move by centrals banks, the Fed said the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank took action to enhance dollar liquidity around the world through existing dollar swap arrangements.
The banks lowered the rate on these swap line loans and extended the period for such loans. Fed Chairman Jerome Powell is scheduled to hold a press conference via telephone at 6 pm eastern time. The actions by the Fed appeared to be the largest single day set of moves the bank had ever taken, mirroring in many ways its efforts during the financial crisis that were rolled out over several months.
The quantitative easing will take the form of $500 billion of treasuries and $200 billion of agency-backed mortgage securities. The Fed said the purchases will begin Monday with a $40 billion installment.
The Fed cut rates to a new range of 0% to 0.25% from 1% to 1.25% and said it would remain there “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
(Excerpt) Read more at cnbc.com ...
If interest rates go to zero selling out in the near future is not a bad idea.
This tells me the downturn will be worse than 911 and it will result in the swamp puppet, Slow Joe Biden, the presidency. The left told the media time to yell fire in the crowded theater and it worked. The swamp is making a comeback.
These rates should affect all loans for cars, homes, RV’s it might even bring CC rates down a notch!! I would expect CC companies to start offering 0% interest rates for certain periods of time with great credit scores!! I used to transfer debt from one card to another with offers like this!,,
Well if restaurants close, there’s gonna be a lot of food available from wholesale places that supply them. And likely pretty cheap.
“Asset prices have been inflated and our budgets haven’t been curtailed. “
Well, there’s that to consider. [Stocks are not an Asset? I suppose not if earnings are in the tank]
So my airline and cruise line stocks are going back up? Hurray! I'm saved.
Isn't that what they say Qom?
If you or anyone else who understands all this and can explain the main import to, for example, a first grader, (ie me) I would appreciate.
Restaurants survive on a very SMALL margin this is horrible mantvwill end up out of business!!
They should have done nothing.
Protect the people. Let the banks that have over leveraged themselves fail. Don’t lie to us. Two days ago there was a bunch of banker bragging about the systems liquidity. What happened to that?
Who is so highly leveraged they can’t handle a 2 quarter hit? If they can’t...they should fail.
Most large companies weather these storms every 5 to 7 years. The market has become overbought because the Fed kept rates at historical lows.
In my opinion, this is a waste of money.
If we keep printing money, the inflation tax will be imposed on future generations. It also hurts bond holders who only get a fixed return- as price inflation will continue.
Printing money is a "wealth transfer" process. It makes financial intermediaries wealthy and lowers the cost for present borrowers, but impoverishes those who have saved, and those who will face price inflaton, later.
I really wish the Govt would announce a plan to immediately help the folks whose incomes will be zero in a matter of days. Darn near everyone working in the restaurant industry lives paycheck to paycheck. They will be hurt the worst in the short term. And they will need some relief.
How exactly does Bailing Out Wall Street Investment Banks and Devaluing Our Money actually Help the Average American Taxpayer??
Trump has no shortage of peeps and institutions in his list.
In pretty sure the Fed management has been on his list for a while.
Perhaps as an Institution too. One would have to go back and scan his talk and writings over the last 40 years.
Is now the time to do that?
I agree with you - I just am not sure now is that time to let so many businesses fail all at once.
I got pick up from a local restaurant about an hour ago (it was empty) and they said business was down 90%.
Tom Winter
@Tom_Winter
NEW: New York City has 329 cases of Coronavirus in total with 5 people dead in total, Mayor announces.
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