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The Federal Reserve on Sunday threw in the proverbial sink to limit the expected slowdown from the coronavirus.
In a rare Sunday decision that comes only days before their formal meeting, the central bank slashed its benchmark interest rate to zero and implemented a bond-buying program of at least $700 billion.
In a statement, the Fed said the economy faced a “challenging period.”
The Fed cut its key benchmark rates by 100 basis points to a range of zero to 0.25%.
Read: Here’s the Fed’s statement on cutting interest rates to near zero
The Fed was following its crisis playbook, which called for the it to be as aggressive as possible once policy makers concluded rates were likely to fall to the zero lower bound.
The vote to slash rates was not unanimous. Cleveland Fed President Loretta Mester dissented, saying she preferred a half-point cut.
The central bank said it planned to buy $500 billion of Treasury securities and $200 billion of agency mortgage-backed securities.
Also: Trump praises Fed’s surprise interest-rate cut, saying market should be ‘thrilled’
The central bank also pledged to do whatever it takes to keep short-term lending markets liquid.
“The kitchen sink has been thrown,” said Ward McCarthy, an economist at Jefferies.
In an even more aggressive stance, the Fed said it expected to keep rates near zero “until it is confident the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” That means rates will stay low as the Fed expects inflation to hit 2%. That has only happened a few times since the financial crisis and never for a sustained period.
Dow Jones Industrial Average futures YMH20, -4.53% sank after the announcement Sunday. The Dow DJIA, +9.36% jumped Friday after President Donald Trump declared a national emergency, but ended the week down about 20% from its record high.
The Fed said it was willing “to use its full range of tools” to support the flow of credit to households and businesses.
The Fed lowered the rate charged to banks for short-term emergency loans from its discount window to 0.25% from 1.75%. It said it would urge banks to tap their liquidity and capital buffers to lend to clients.
To help foreign firms and banks who need dollars DXY, -0.82% , the Fed activated dollar swap plans with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank.
Trump has been urging the Fed to act and said after the announcement that he was pleased with the decision.
