Federal Reserve officials went into crisis-fighting mode as they grasped the scale of the harm the coronavirus pandemic would likely do the U.S. economy.

Policy makers saw risks pointing to the downside and warranting a “forceful” response, according to a record of their emergency gathering that began at 10 a.m. Sunday, March 15.

“All participants viewed the near-term U.S. economic outlook as having deteriorated sharply in recent weeks and as having become profoundly uncertain,” minutes published Wednesday of the Federal Open Market Committee meeting showed.

Slashed Rates

“Participants noted that risk-management considerations pointed toward a forceful monetary policy response,” in light of the “sharply increased downside risks to the economic outlook” posed by the virus outbreak, the minutes showed.

At the unscheduled meeting, officials announced that they would cut their benchmark interest rate to nearly zero and relaunch massive bond-buying programs to pump cash into the financial system.

“Participants agreed that the Federal Reserve’s efforts to relieve stress in financial markets would help limit downside near-term outcomes by supporting credit flows to households and businesses,“ the minutes said. “Among the downside risks to this year’s U.S. economic outlook, participants prominently cited the possibility of the virus outbreak becoming more widespread than expected.“

Millions of Americans have lost their jobs over the last several weeks as businesses have shuttered to stem the virus’s spread. Private-sector forecasters now expect a historic contraction in second quarter U.S. output, followed by a rebound in the second half of the year.

In an evening teleconference following the March 15 announcement, Fed Chair Jerome Powell told reporters that he expected the virus to run its course and the U.S. economy to resume a normal level of activity. But he said “in the meantime, the Fed will continue to use our tools to support the flow of credit to households and businesses and support demand with monetary policy -- ultimately, to do what we can to see that the recovery is as vigorous as possible.”

Since then, the U.S. central bank has begun rolling out a number of emergency lending programs first deployed in the wake of the 2008 financial crisis. Those include measures to fund short-term borrowings of companies in the commercial paper market and clean up the balance sheets of dealer banks and money-market mutual funds by accepting a wide range of securities as collateral in exchange for cash loans.

The Fed has also since announced new lending programs which would see them extend support to large companies through purchases of longer-term corporate debt, as well as facilities that will offer lifelines to small and medium-sized businesses. Investors also increasingly expect the central bank to intervene in the market for municipal debt as states and cities face an increasingly dire financial situation brought about by government-mandated shutdowns, which have decimated tax revenues.

Minutes of the March 15 meeting showed Fed officials were at that point anticipating the need for additional action.

“Participants generally noted that other measures to support the flow of credit to households and businesses, including those that relied on section 13(3) of the Federal Reserve Act, might be needed in such an uncertain and rapidly evolving environment and that it would be prudent for the Federal Reserve to develop and remain prepared to implement such measures,” the minutes said.