The federal funds rate is a benchmark for other short-term rates, and also affects longer-term rates, so this move was aimed at supporting spending by lowering the cost of borrowing for households and businesses. These cuts lowered the funds rate to a range of 0% to 0.25%. Federal funds rate: The Fed cut its target for the federal funds rate, the rate banks pay to borrow from each other overnight, by a total of 1.5 percentage points at its meetings on March 3 and March 15, 2020.
ECONOMY AND FINANCIAL MARKETS? Easing Monetary Policy This post summarizes the Fed’s actions though the end of 2021. In that same month, Powell discussed the Fed’s goals during a webinar at the Brookings’ Hutchins Center on Fiscal and Monetary Policy. “We are deploying these lending powers to an unprecedented extent … will continue to use these powers forcefully, proactively, and aggressively until we are confident that we are solidly on the road to recovery,” Jerome Powell, chair of the Federal Reserve Board of Governors, said in April 2020. government and mortgage-backed securities and lending to support households, employers, financial market participants, and state and local governments. The Federal Reserve stepped in with a broad array of actions to keep credit flowing to limit the economic damage from the pandemic. The sharp contraction and deep uncertainty about the course of the virus and economy sparked a “dash for cash”-a desire to hold deposits and only the most liquid assets-that disrupted financial markets and threatened to make a dire situation much worse. The coronavirus crisis in the United States-and the associated business closures, event cancellations, and work-from-home policies-triggered a deep economic downturn.
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