The Federal Reserve on Sunday slashed interest rates to zero and said it would buy $500 billion in US government bonds.
Rates will remain at zero until the central bank is “confident that the economy has weathered recent events.”
The unprecedented rate cut follows stock market plunges not seen since Black Monday. The Dow plummeted 2,250 at open this Monday, triggering a circuit breaker that suspended trading for 15 minutes.
The breaker, which goes into effect if the S&P 500 drops 7%, was triggered three times in the past week amid fears that the coronavirus will disrupt supply chains and push the economy into a recession.
“I want to congratulate the Federal Reserve,” said President Trump to reporters. “I think people in the market should be very thrilled.”
The Administration is also pursuing a stimulus package over $1 Trillion that would build on the $8.3 billion in emergency funds already approved by Congress. The new package is expected to include support for airlines and cash for working Americans. It might also include direct payments to American workers.
“We’re looking at sending checks to Americans immediately,” said Treasury Secretary Steven Mnuchin. “What we’ve heard from hardworking Americans is many companies have shut down, whether it’s bars or restaurants…Americans need cash now and the president wants to get cash now. And I mean now in the next two weeks.”
Individual checks could be as high as $1,000.
Later this week, the Senate is expected to vote on a separate package to expand paid leave benefits, boost unemployment insurance, and make COVID-19 testing more affordable. The bill has already been approved by the House.
Author’s Note: Trump has dramatically changed his stance on the coronavirus, likely to save face come election time. If he doesn’t support measures to help working-class Americans survive the virus, voters will crucify him in November.