The America Federal Reserve has cut rates for the second time in less than two weeks, in an unexpected move to calm markets alongside coordinated action from central banks worldwide.
The move follows the outbreak of coronavirus that has continued to cause havoc worldwide and has caused stock markets to plummet.
In a statement on Sunday, the Federal Open Market Committee cut rates by 100 basis points to 0–0.25%, the same low they reached after the 2008 crisis.
It expects to leave rates at this level until it is “confident the economy has weathered recent events”.
Fed emergency rates cut on March 3 is positive for US markets and came earlier than the anticipated March 18 date. The fed cut will increase demand for the dollar and signals a positive outlook of the US Dollar index.
G7 finance ministers and Central Bank Governors held emergency meeting vowing to take all possible steps to safeguard the global economy from coronavirus impact. Local media reported.
The Reserve Bank of Australia cut official interest rates to a new record low of 0.5% due to the significant effect of the coronavirus outbreak on the Australian economy.
Across Asia, Bank of Japan committed ¥500 billion ($4.6 billion-Ksh476.3 billion) in government bonds with a repurchase agreement to provide liquidity to market players.
With the increasing uncertainty, activity has migrated to safe-haven assets such as gold, Japanese Yen, US Dollar, and US Treasuries.
