WASHINGTON (REUTERS, BLOOMBERG) - With panic buying on Main Street and fear-driven sell-offs on Wall Street, the US Federal Reserve cut interest rates for the second time in less than two weeks on Sunday (March 15) to help shore up the United States economy amid the rapidly escalating global coronavirus pandemic.

For the second time since the financial crisis of 2008, the Fed cut rates at an emergency meeting, aiming for a target range of zero per cent to 0.25 per cent, down 1 percentage point from a range of 1 per cent to 1.25 per cent.

It also launched a massive quantitative easing (QE) programme, which will entail US$700 billion (S$989.6 billion) worth of asset purchases comprising US Treasury bonds and mortgage-backed securities.

The US central bank also announced several other actions, including letting banks borrow from the discount window for as long as 90 days and reducing reserve requirement ratios to zero per cent. In addition, it united with five other central banks to ensure dollars are available around the world via swap lines.

Fed chairman Jerome Powell held a conference call with reporters to discuss the actions during which he reiterated the central bank's resistance to negative interest rates as some countries have used.

"The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range," the Fed said in a statement.

"The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals," the Fed said.

US President Donald Trump, who as recently as last Saturday attacked the Fed for not lowering rates faster and further, called the move "very good news", saying it "makes me very happy".

But investors responded negatively to the move, with US stock futures plunging to their offshore trading limit within half an hour from opening on Monday.

"They must really be scared. To do that in one fell swoop is really quite shocking. They pulled out whatever weapons they had and my sense is I think it may help initially but I don't think it goes much further because this is still a developing issue," said Mr Robert Pavlik, chief investment strategist at Slatestone Wealth in New York. "They used up basically all their ammunition and we're down to sticks and stones."

The e-mini futures of S&P 500 index dropped 4.77 per cent to their daily trading limit outside the US on mounting worries about further economic disruptions as more countries took steps over the weekend to limit human moves close their borders over the weekend.

US Treasuries futures jumped more than a full point.

Five other central banks also cut pricing on their swap lines to make it easier to provide dollars to their financial institutions facing stress in credit markets. The swap lines were set up by the Fed, the Bank of Canada, European Central Bank, Bank of England, Bank of Japan and Swiss National Bank in the financial crisis. They also agreed to offer three-month credit in US dollars on a regular basis and at a rate cheaper than usual.

The move was designed to bring down the price banks and companies pay to access US dollars, which has surged in recent weeks as a coronavirus pandemic spooked investors.

The Fed already cut interest rates by half a percentage point on March 3 at an emergency meeting. Policymakers were due to hold their next interest-rate setting meeting on Tuesday and Wednesday.

The Reserve Bank of New Zealand joined in with an unscheduled cut of 75 basis points to its rates, and speculation was rife the Reserve Bank of Australia would also ease.

"Central banks around the world continue to react with emergency interest rate cuts to assist with the shock to demand arising from the spread of the Covid-19 virus, with necessary public health containment efforts coming at a substantial economic cost," National Australia Bank chief economist Alan Oster. "Central banks are also appropriately providing additional liquidity to financial systems."

Most markets have yet to open in Asia, but currencies were active with the US dollar falling given that the Fed had cut by more than its peers.

The US dollar dropped 1.7 per cent on the Japanese yen to 106.01 , while the euro climbed 0.5 per cent to US$1.1168.

The risk-sensitive Australian dollar fell 0.25 per cent to US$0.6182 while the New Zealand dollar slipped 0.1 per cent to US$0.6048.