U.S. Federal Reserve cuts rates to zero to support economy amid coronavirus pandemic

The United States Federal Reserve has announced to cut its target interest rate to zero, in a bold, emergency action to support the economy during the coronavirus pandemic, CNN reported on Sunday.

The last time it cut rates to zero was during the global financial crisis just over a decade ago.

In addition to rate cuts, the Fed also announced it would purchase another $700 billion worth of Treasury bonds and mortgage-backed securities.

It also struck a deal with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank to lower their rates on currency swaps to keep the financial markets functioning normally.

Although the underlying U.S. economy has remained on solid ground — unemployment is at a historic low and consumer confidence has stood near all-time highs — the Fed said the coronavirus outbreak has significantly hurt the global financial conditions.

The Fed could, in theory, take rates negative, as some other central banks have, but Federal Reserve Chairman Jerome Powell has resisted that idea, the report stated.

The Fed maintained that it would hold rates steady near zero until it is confident that the U.S. economy pulls out of the coronavirus-fueled economic quagmire.