The US has cut interest rates to almost zero and launched a $700bn stimulus programme in a bid to protect the economy from the effect of coronavirus.
It is part of a co-ordinated action announced on Sunday in the UK, Japan, eurozone, Canada, and Switzerland.
In a news conference Fed chairman Jerome Powell said the pandemic was having a “profound” impact on the economy.
US President Donald Trump said the emergency action “makes me very happy”.
The Fed has cut rates to a target range of 0% to 0.25%, and said it would it begin buying bonds – quantitative easing – a move that pumps money directly into the economy.
The central bank had already cut interest rates by half a percentage point after an emergency meeting on 3 March.
It was the first rate cut outside of a regularly scheduled policy meeting since the financial crisis in 2008.
Stock markets have plunged in recent days amid fears that economic paralysis will wipe out corporate profits and spark a global recession.
But early indications suggest the Fed’s move may not shore up financial markets. US stock market futures, which anticipate the direction of shares when trading begins, were almost 4% down.