Fed slashes rates to near zero, eases bank lending rules

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Jerome Powell

Federal Reserve Chair Jerome Powell pauses during a news conference, Tuesday, March 3, 2020, while discussing an announcement from the Federal Open Market Committee, in Washington. In a surprise move, the Federal Reserve cut its benchmark interest rate by a sizable half-percentage point in an effort to support the economy in the face of the spreading coronavirus. Chairman Jerome Powell noted that the coronavirus “poses evolving risks to economic activity.” (AP Photo/Jacquelyn Martin)

WASHINGTON (AP) – The Federal Reserve took emergency action Sunday 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 has dropped its requirements that banks hold cash reserves in another move to encourage lending.

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