Market history · Central banks ·
The Fed goes back to zero
On Sunday 15 March 2020 the Federal Reserve cut its policy rate to 0–0.25% and announced it would buy at least $500 billion of Treasuries and $200 billion of mortgage-backed securities. It followed an emergency cut earlier in the month.
Over the following days it added programmes to backstop money markets, corporate credit and lending, and later committed to buying assets "in the amounts needed". Markets stabilised within weeks.
The takeaway
Central-bank backstops can change the shape of a crisis, and of the recovery, within days.
Sources
This is a retrospective about a past event, provided for general information. It is not investment advice, does not describe RockLake's positioning at the time, and past performance is not a guide to future performance. Read the risk warning.