Federal Reserve moves to fight now-likely recession in the US

The Federal Reserve unleashed much of its arsenal Sunday to combat the economic damage caused by the coronavirus, cutting short-term interest rates to zero, renewing its crisis-era bond purchases to lower long-term rates and encouraging more bank loans to households and businesses.

The moves, which were cheered by President Donald Trump, are aimed at combating a now-likely U.S. recession.

Central bank policymakers agreed to lower the Fed’s benchmark federal funds rate by a full percentage point to a range of zero to 0.25% – where it hovered for years during and after the 2008 financial crisis.

“The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” the Fed said in a statement. “The effects of the coronavirus will weigh on economic activity in the near-term and pose risks to the economic outlook.”

The Fed already had cut its key rate by half percentage point earlier this month. Many economists expected the central bank to agree to another percentage point cut at a two-day meeting that ends Wednesday, but the Fed decided to move early in a historic show of force.

The central bank is also renewing its bond buying campaign, saying it will purchase $500 billion in Treasury bonds and $200 billion in mortgagebacked securities to lower rates for mortgages and other consumer and business loans. The Fed said it will reinvest those proceeds instead of letting them roll off its books.

Trump has been critical of the Fed and Chairman Jerome Powell, whom he appointed to the chairmanship in 2017.

On Saturday, he again complained the central bank hasn’t been “proactive” and hasn’t done enough to calm financial markets amid the coronavirus pandemic.

But Trump’s criticism gave way to praise.

“I would think there are a lot of people on Wall Street that are very happy,” he said. “I can tell you I’m very happy. I didn’t expect this.”