The Federal Reserve building. REUTERS
The Federal Reserve building. REUTERS

Washington —  The US Federal Reserve cut interest rates for the second time in less than two weeks on Sunday in another emergency move to help shore up the US economy amid the rapidly escalating global coronavirus pandemic.

In a statement, the central bank said it was cutting rates by to a target range of 0% to 0.25%.

“The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the committee decided to lower the target range,” the Fed said in a statement.

“The committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals,” the Fed said.

The Fed already cut interest rates by half a percentage point on March 3 at an emergency meeting, the first rate cut outside a regularly scheduled policy meeting since the financial crisis in 2008.

Policymakers were not due to hold their next interest-rate setting meeting until March 17-18. 

President Donald Trump, who has been critical of the independent Fed for not acting more aggressively, praised the moves. “What's happened with the Fed is phenomenal news,” he said.

Treasury secretary Steven Mnuchin said Sunday the impact of the coronavirus pandemic was producing a “slowdown” in the American economy but that he did not expect a full-blown recession.

Congress on Saturday overwhelmingly approved a series of measures aimed at alleviating the impact of the virus on the country's economy, following days of intense discussions between administration officials and Democratic leaders in Congress.

Earlier, the Reserve Bank of New Zealand slashed interest rates by 75 basis points, sinking the country's currency, as it prepared for a “significant” impact on the economy from the coronavirus outbreak.

The unprecedented move follows rate cuts by central banks around the world, including the Australian Central Bank.

The bank cut the official cash rate to 0.25%, and its monetary policy committee agreed unanimously to keep the OCR at this level for at least 12 months, RBNZ said in its statement.

The New Zealand dollar fell more than  2% at one stage after the surprise cut, but later recovered slightly, settling at $0.5985 

Reuters, AFP

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