According to former Fed governor Randy Kroszner, while the Federal Reserve has taken the right first steps to mitigate the damage caused by the coronavirus, there is still more to be done. In this Video Spotlight, Kroszner discusses with CNBC how reviving programs from 2008 and 2009.
Kroszner also discusses how the Fed bought back mortgage-backed securities a decade ago, and why the Fed's emergency moves will help narrow spreads in mortgage-backed securities.
In addition to the rate cut, the Fed announced that over the coming months that it will increase its holdings of Treasury securities by at least $500 billion and its holdings and agency mortgage-backed securities by at least $200 billion.
The reduction of interest rates to 0% was suspected at the end of last week, as Goldman Sachs economists expected this move, according to The Street.
“In light of the continued growth in coronavirus cases in the U.S. and globally, the sharp further tightening in financial conditions, and rising risks to the economic outlook, we now expect the [Federal Open Market Committee] to cut the funds rate 100 basis points on March 18," Hatzius wrote.