The cuts that started in the supply direction due to the coronavirus and then continued in both supply and demand directions had a great impact on the global economy, especially China and Europe. Before the March 18 meeting, the Fed went to a 50 bp interest rate cut on March 3, as a principle, and went on a 100 bp rate cut last night and repeated the rate cut for the first time after the 2008 crisis. While the Fed lowered the interest to the 0.25% -0.0% band, it also prepared an expansion package of $ 700 billion.
Fed President Powell, who made a statement yesterday after the first interest rate cut during the month, stated that the pressure in inflation will continue for a while, that the Treasury bond market and others are signaling strong stress and low liquidity, and that the Fed is planning to buy securities based on Treasury bonds and mortgages. he said. Powell also stated that, within the scope of the 700 billion dollar expansion program, banks were given the opportunity to borrow from the rediscount window for 90 days, while they took some additional measures such as reducing reserve reserve ratios to zero, and they would work with five central banks to ensure that dollar liquidity is achieved on a global scale through swap lines.
Powell also noted that after the decision taken yesterday, there was no need for the FOMC meeting on March 18.
After the Fed’s yesterday’s move, the dollar fell as the first reaction in the opening of the market, while gold rose as the first reaction. The US Dollar Index, which rose to 98.70 last week, traded at 98.10 in the last hour after the interest rate cut to 97.75. Ons Gold closed last week with a sharp loss of over 6%, and the price fell to $ 1,529, the precious metal, which first rose to $ 1,575 after the interest rate decision, is trading at $ 1,545 in the last hour.
The most severe losses seen after the 2008 crisis in the markets last week and the closing of gold positions to complete the margins caused the gold prices to lose greatly with the return of cash with the increase of panic. This week started with an increase in the gold week with interest rate cuts, but losses in both shares and commodities may continue in case of escaping cash in the markets.