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 ...
You are going to bring a virus to justice?
So much for preventing the bottom from falling out from the stock markets.
Shhh dont tell anyone lol
Yup. :(
That presumes there's no restructuring needed. If we need new industries like medical-related, then they need money and to get the money they need markets.
Of course you could have the government take that over and make Bernie and other communists very happy.
Treasuries soaring means rates (interest rates) drop dramatically...inverse relationship.
I’m down 14%.
Certainly a valid point. The statists would counter that they would simply print up cash and stand outside the closed banks and hand it out. But the biggest problem with the market closing idea by far is the fact that the markets are needed for economic growth. We would guarantee a major recession by closing a month.
I know Trump is not responsible for the decades of credit expansion, but at some point, we need to have credit markets restored to sensible lending and market forces - not another trillion in monetary pumping!!!
QE to infinity and beyond.!!!!!!!
I agree with that although completely disagree with the idea of closing the markets (or anything resembling that idea). That would be far worse than the coming flood of liquidity and malinvestment. But you are generally right that apart from a bump in financial stocks the markets will not like the fear signal. For long run strength the markets need predictable money and printing it makes it unpredictable.
Son just bought 2019 F150 with 12800 miles for 29000. Financed at 3.5% for 5 yrs.
I don’t think they are out to get Trump, but this move probably won’t be good for him in the long run. The Fed can’t stay at zero forever and is going to have to raise rates eventually. Probably just in time for the election.
I agree, Isn’t that what Germany did right before that country fell into financial ruin, just before the days of Hitler?
I don't deny the harmful effects of this virus, but I think if we keep cool heads, take sensible precautions, and don't panic, everything will get better as it did with H1N1.
Never try and catch a falling knife.
Cheaper to use cash than toilet paper in Venezuela
No evidence, so I take the claim that inflation was 100% between 2008/9 and 2011/12 with a very large grain of (free) salt.
How does that affect mortgages?
“So my airline and cruise line stocks are going back up? Hurray! I’m saved.”
If that’s what you owned, your goose was cooked before this.
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