This afternoon, the central bank’s Federal Open Markets Committee (FOMC) announced a target range for the federal funds rate of 0 to 0.25%. This unprecedented move cuts the key rate for overnight lending to banks by 0.75% to 1%. The move was almost as aggressive as the central bank could be on monetary policy. By allowing the funds rate to float between zero and 0.25%, it will no longer be a tool of monetary policy.
Other measures beyond lowering interest rates are expected as the central bank pledged in its policy statement “The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth.” The Fed stated it will begin buying credit card debt and student loans by February as well as evaluate the benefits of purchasing longer-term Treasury securities.
The DOW closed up 359.61 points (4.20%), the Nasdaq closed up 81.55 points (5.41%) and the S&P closed up 44.61 points (5.14%).
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