The FOMC and other central banks around the planet have made an emergency Sunday evening move.

ICYMI:

In brief here's what has happened, the Fed has

  • cut rates to zero
  • increased the length of loans for banks to 90 days
  • has lowered bank reserve requirements (the amount of cash they need to keep on hand, in brief) which will (this is the plan) free up funds for banks to keep customers afloat with lending and easier standard through the crisis
  • launched USD700 bn in new QE
  • all this in coordination with other central banks

A bit more detail:

  • the cut to rates to zero eases credit market conditions, lending was drying up
  • longer, extended time period loans help eliminate panic in short-term lending market, in effect this will assist banks to keep lending. If this assists firms in avoiding mass layoffs (such as occurred in the GFC 2008 crisis), at the margin, it'll help the economy.
  • Lower bank reserve requirements encourages bank lending as a complement to the Community Reinvestment Act (CRA) emergency measures the Federal Reserve put into place with their first pre-emptive cut back in early March (this involved steps to waive late fees, easing credit, for firms and consumers)
  • $700 b in new QE will (this is the plan) ease the recession ahead
  • coordination with other central banks on Sunday night pre much of Asia opening is a big step, meant to ease panic
  • CBs have committed to do more and for as long as needed
The FOMC and other central banks around the planet have made an emergency Sunday evening move.

ps. If your immediate response to this news is its not good as its not a vaccine/cure for the virus you are missing the point - the Fed can't do this. They do what they can with the tools available to them.

If your immediate response is its no good because we need fiscal efforts, again the Fed can't do this.

If your immediate response is its not enough, well you may be correct. The Fed says it'll do more if necessary and as long as necessary.