Fed cuts rates, eases bank lending rules

The Federal Reserve took emergency action and slashed its benchmark interest rate by a full percentage point to nearly zero and announced it would purchase more Treasury securities to encourage lending to try to offset the impact of the coronavirus outbreak.

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 Fed also said it will purchase $500 billion of Treasury securities and $200 billion of mortgage-backed securities to smooth over market disruptions that have made it hard for banks and large investors to sell Treasuries.

The disruptions bumped up the yield on the 10-year Treasury last week, an unusual move that threatens to push borrowing costs for mortgages and credit cards higher. The Fed also said it has dropped its requirements that banks hold cash reserves in another move to encourage lending. The Washington Post reported this is the most dramatic step since the 2008 financial crisis to bolster the U.S. economy in the face of coronavirus.

President Donald Trump tested negative for the coronavirus, the White House physician said Saturday evening after the president held a press briefing on the administration's latest moves to combat the outbreak.

The president consented to a test Friday night, Navy Commander Sean Conley said in a statement release in Washington, D.C., and he remains symptom-free one week after dining with a Brazilian government delegation, some of whose members have tested positive for the illness, at his Mar-aLago resort in Florida.

Trump, who has continued to shake hands with people, including during his announcement Friday at the White House that he was declaring a national emergency, despite the recommendation to limit physical contact, told reporters that "it almost becomes a habit."

The statement did not say if Trump will be re-tested. Trump said that he has been tested for coronavirus after being questioned about it during at White House's Rose Garden address on Friday.

"I also took the test last night," Trump said during the White House briefing. "And I decided I should, based on the press conference yesterday. People were asking, ' Did I take the test?'"

Asked when test results would be returned, he said: "A day, two days. They send it to a lab." Trump also touted the bipartisan congressional funding package passed early Saturday and the rise in the stock markets following his Rose Garden address.

"I was honoured to see that the stock market, you were mostly there with us, set a record in a short period of time, over 45-minute period that we had the press conference yesterday.