Coronavirus: US slashes rates and launches huge stimulus programme

Image copyright Getty Images

The US has cut interest rates to almost zero and launched a $700bn stimulus programme in a bid to protect the economy from the impact of coronavirus.

It is part of a co-ordinated action announced on Sunday in the UK, Japan, eurozone, Canada, and Switzerland.

Announcing the US move, the Federal Reserve said the “outbreak has harmed communities and disrupted economic activity in many countries”.

Fed chairman Jerome Powell will hold a news conference later on Sunday.

US President Donald Trump said the Fed’s action “makes him very happy”.

The Fed has cut rates to a target range of 0% to 0.25%, and said it would it begin buying bonds – quantitative easing – a move that pumps money directly into the economy.

The central bank had already cut interest rates by half a percentage point after an emergency meeting on 3 March. It was the first rate cut outside of a regularly scheduled policy meeting since the financial crisis in 2008.

Stock markets have plunged amid fears that economic paralysis will wipe out corporate profits and spark a global recession.

But in a statement on Sunday, the Fed said: “The Federal Reserve 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.”