Federal Reserve slashes interest rates to zero

Fed has taken one of the most dramatic steps since the 2008 financial crisis to lift the U.S. economy and to face the coronavirus impact. They drop interest rates to zero and buy at least $700 billion in government and mortgage-related bonds. The benchmark U.S. interest rate is now in a range of 0 to 0.25%, down from a range of 1 to 1.25%. Further, they are restarting the bond purchases known as “quantitative easing,” in which the central bank buys hundreds of billions of dollars in bonds to further push down rates and keep markets flowing freely. The US turning back to unconventional monetary policies. The majority of the buying, at least $500 Bn, will be U.S. Treasury bonds. The rest will be mortgage-backed securities.