U.S. Fed slashes interest rates to near zero, launches new round of QE amid COVID-19 outbreak
美 연준, 기준금리 제로 수준 인하…양적 완화
We start with an emergency move by the Federal Reserve aimed at helping the U.S. economy ride the increasingly choppy tides of the COVID-19 outbreak.
It has slashed its key interest rate to a level not seen since during the 2008 global financial crisis zero.
For more, we have our Yoon Jung-min on the line.
Jung-min, walk us through what is happening.
Sure, Se-min. The Fed has slashed its benchmark interest rate to zero percent to a quarter-of-a-percent,… from the previous 1-to-1-and-a-quarter percent.
It wasn’t that long ago that the Fed cut its key rate earlier this month.
Now, they are at the zero level,… something we haven’t seen since the global financial crisis over a decade ago.
The Fed is also going to launch a massive 7-hundred-billion dollar quantitative easing program.
It will be in the form of 500-billion dollars of Treasuries,… and 200-billion of agency-backed mortgage securities.
The purchases will begin on Monday, local time.
In addition, the Fed said it will take action with central banks around the world to enhance dollar liquidity through existing swap arrangements.
They include the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank.
The move also puts intense pressure on South Korea’s central bank to hop on the global bandwagon,… by slashing South Korea’s key rate.
The Bank of Korea has already hinted it will hold an emergency rate-setting meeting this week,… likely as early as Tuesday.
As it stands,… the BOK’s benchmark rate is at 1-and-a-quarter percent,… that was left unchanged during its monetary board meeting late last month,… citing the need to take a wait-and-see approach.
Separately,… officials in South Korea have been holding a series closed-door macroeconomic finance related meetings to discuss the economic impacts South Korea could face over the growing market uncertainty. They are also meeting this morning.
Turning our focus to the markets now…
How are South Korean markets doing this morning,… waking up to the news from the Fed?
Right. The benchmark KOSPI opened about 1-point-9 percent higher on Monday,… and the KOSDAQ opened over 2 percent higher,… but they keep bopping up and down.
So we’ll have to keep an eye on them.
In fact, from today, short selling is banned for six months on the Korean markets.
This is to protect companies from the economic blowback as the coronavirus pandemic widens.
The duration of the ban, however, will depend on future conditions.
The ban is the third of its kind in South Korea.
The last ban was put in place in the summer of 2011.
That’s all have for now. Se-min.
#U.S. #economy #zero
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