Fed cuts funds rate to zero, launches huge new QE

The Fed cuts the federal funds rate target range by 100 basis points to 0%-0.25%, as the “effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook,” the central bank said.

In addition the central bank promises over the next few months to lift its holdings of Treasury paper by $500B and holdings of MBS by $200B. Also, all principal payments from existing holdings will be reinvested.

Fed says it “will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy,” and “is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals.”

Voting against this evening’s move was Cleveland Fed boss Loretta Mester, who only wanted to trim rates by 50 basis points.

Fed Chair Jay Powell will hold a press conference at 6:30 p.m. ET.

https://seekingalpha.com/news/3551833-fed-cuts-to-zero-launches-huge-new-qe