In an emergency move on Sunday, March 15th, 2020, the Federal Reserve announced that it dropped its benchmark interest rate to zero, the new fed funds rate is now targeted at 0 – 0.25% down from the previous target range of 1.00 – 1.25%.
The Fed’s decision was a result of the coronavirus outbreak harming communities and disrupting economic activity in many countries, including the United States. The Fed Chairman, Jerome Powell states that the Fed would be patient before lifting the rates again. “We will maintain the rate at this level until we’re confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals,” Powell said.
The policy decision also entails $700 billion in quantitative easing and other actions to provide banks with more liquidity. The Fed also set up unique facilities to fund commercial paper, provide more accessible credit to primary deals, and give liquidity to money market funds.