Less than 24 hours after President Donald Trump accused the Federal Reserve on Saturday of not being “aggressive” enough to counteract the coronavirus-linked economic slump, the Fed slashed interest rates effectively to zero and boosted assets by $700 billion to fight the COVID-19
We have the number one currency in the world by a factor of many times. As you know, we have the currency, we have the power; we have by far the strongest currency also. You look at the dollar, the strength of the dollar. Our fed is not doing what they should be doing. We shouldn’t have a fed rate that’s higher than our competitor nations. You look at Germany, they’re essentially under zero, they’re negative. There are many countries negative. Japan is negative, Germany is negative, others are negative and we’re paying higher interest rates. And what I’d like to do is, frankly, refinance our debt. We could refinance our debt very easily at a much lower rate. We have some tremendous opportunities right now, but Jerome Powell is not making it easy… have the right to remove [Powell], I’m not doing that… No, I’m not doing that. I have the right to also take him and put him in a regular position and put somebody else in charge and I haven’t made any decisions on that. – President Trump, March 14, 2020
The Federal Reserve on Sunday slashed interest rates by a full percentage point to near zero and said it would buy $700 billion in Treasury securities, an aggressive step to insulate the U.S. economy from the coronavirus pandemic.
The benchmark federal fund rate is now at a range of 0 to 0.25 percent, down from a range of 1 to 1.25 percent. The cut essentially brings the nation’s interest rate to zero — something that President Trump has repeatedly pressed for over the past year. The historically low interest rates, which not been at this level since the 2008 financial crisis, are expected to remain until the economy recovers from the recent downturn.
The Fed also said that it will buy at least $500 billion in Treasury securities and $200 billion in mortgage-backed securities over the coming months, a program known as “quantitative easing.”
President Trump applauded the Fed’s decision to cut rates, saying “that makes me very happy.”
“That’s a big step, and I’m very happy they did it,” Trump said at a White House news conference with his coronavirus task force. “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.”
MacDailyNews Take: Historic measures for historic times.