In a series of tweets, New York City Mayor Bill de Blasio announced that he will sign an executive order on Monday to shut down a string of businesses across the city, effective on Tuesday, March 17 at 9:00 a.m., including restaurants, bars and cafes that will remain open for take-out and delivery only. The mayor will also close nightclubs, movie theaters, small theater houses and concert venues to stop the spread of the coronavirus.
Says de Blasio,
“This is not a decision I make lightly. These places are part of the heart and soul of our city. They are part of what it means to be a New Yorker. But our city is facing an unprecedented threat, and we must respond with a wartime mentality.”
Los Angeles Mayor Eric Garcetti is also closing movie theaters, bars, nightclubs, gyms and entertainment venues until March 31, a date that is subject to change depending on the outbreak.
The announcements coincide with the Federal Reserve’s emergency measures revealed on Sunday. The central bank has lowered its benchmark interest rate to zero. The dramatic move is part of a sweeping plan to stimulate the economy and combat the effects of the coronavirus outbreak, with the Federal Reserve rebooting its quantitative easing program. The new round of QE means the Fed will purchase a minimum of $700 billion in Treasury bonds and mortgage-backed securities.
Amidst a shrinking number of levers to pull to stabilize the economy following the drastic restrictions impacting travel, tourism, entertainment and hospitality, the Federal Reserve has set a new rate target of 0% to 0.25%, down from 1% to 1.25%.
Chairman Jerome Powell says the central bank will also support banks that provide small business loans in order to reduce the pain of the economic fallout from the global pandemic.
Says Powell,
“US banks are strong, have high levels of capital and liquidity, and are well positioned to provide credit to households and businesses. Against this favorable backdrop, the virus presents significant economic challenges. Like others, we expect that the illness and the measures now being put in place to stem its spread will have a significant effect on economic activity in the near term.”
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“When stresses arise in the treasury market, they can reverberate through the entire financial system and the economy. To prevent this from happening and to support the smooth functioning of the treasury market, we announced today that we will purchase at least $500 billion of Treasury securities over the coming months.
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To improve the functioning of this market and to ensure the effective transmission of monetary policy to borrowers and the economy, we will also purchase at least $200 billion of agency mortgage-backed securities over coming months and immediately cease the runoff of these securities in our portfolio.”
The announcement triggered a lackluster response from the markets as concerns mount over the nature of the virus, uncertainty about its duration, severity and the people it will affect, and the Fed’s limited number of remaining options should the stimulus plan fail. Dow futures slid 1,041 points, down 4.6% as the S&P 500 futures dropped 4.8% and the Nasdaq Composite futures slid 4.6%.
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