Fed slashes rates and launches QE in “panicky” move

The Federal Reserve made another emergency move on Sunday.

Saying that “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States”, the Fed cut its fed funds rate to 0-0.25 percent from 1-1.25 percent and launched a US$700 billion quantitative easing programme.

However, initial market response was negative. S&P 500 futures plunged by its daily 5 percent limit on Sunday night.

“The Fed has thrown most its weight behind this move, offering almost everything it has to give, which raises the inevitable question — if this doesn’t work, what will?” said Seema Shah, chief strategist at Principal Global Investors.

“When you have folks in power acting in a very panicky way, doing off-scheduled meetings and throwing everything they can at the situation, that doesn’t send a very reassuring signal to the general population,” said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors.