WASHINGTON - The Federal Reserve on Sunday slashed its interest rate to nearly zero to help keep the economy afloat during the coronavirus crisis.
U.S. Central Bank Chairman Jerome Powell announced the 1% cut on Sunday - the deepest interest cut rate since the 2008 financial crisis.
In a statement issued Sunday, the Federal Reserve said it is part of a co-ordinated action announced on Sunday in the UK, Japan, eurozone, Canada, and Switzerland.
Announcing the move, the Federal Reserve said the "outbreak has harmed communities and disrupted economic activity in many countries".
Federal Reserve Chair Jerome Powell said the measures are intended to stabilize major financial markets. He said other measures are needed to help small businesses and households affected by the coronavirus pandemic.
The Federal Reserve also said it would purchase more Treasury securities that security sellers had difficulty selling in the market.
Stock markets have plunged over recent days amid fears that economic paralysis will wipe out corporate profits and spark a global recession.
U.S. President Donald Trump hailed the announcement as "great news" for the country, saying the Fed's action "makes me very happy".
He has repeatedly urged the Federal Reserve to “get on board and do what they should do”, arguing that U.S. benchmark rates should be as low as those in Europe and Japan. Trump also signalled he could replace Powell, whom he had appointed to chair the U.S. central bank.
Powell said the rates will stay at nearly zero until the bank is confident that the economy has weathered recent events.
Extremely low or negative rates are usually a sign of an economy in distress.