Iran Press/America: The central bank said the effects of the outbreak will weigh on economic activity in the near term and pose risks to the economic outlook. The central bank said it will keep rates at nearly zero until it feels confident the economy has weathered recent events.
The Federal Reserve is all but sure to take its most drastic steps Wednesday since the depths of the 2008 financial crisis to try to counter the coronavirus’ growing damage to the US economy and the financial markets.
With the virus’ spread causing a broad shutdown of economic activity in the United States, the Fed faces a daunting task. Its tools intended to ease borrowing rates, facilitate lending and boost confidence aren’t ideally suited to offset a fear-driven halt in spending and traveling.
Still, analysts expect the Fed to try. Some economists say the policymakers, led by Chair Jerome Powell, could cut their already low benchmark interest rate by up to a full percentage point. Not since December 2008 has the central bank announced a rate cut that deep.
The Fed may move even earlier than its scheduled meeting Wednesday. A short-term lending market that many large companies use to access cash, known as the “commercial paper” market, has been hit with far more sellers of debt than buyers. That has caused interest rates for those loans to spike, threatening the ability of larger businesses to borrow.
The Fed already cut interest rates by half a percentage point on March 3 at an emergency meeting, the first-rate cut outside of a regularly scheduled policy meeting since the financial crisis in 2008.
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