WASHINGTON -- The US Federal Reserve on Sunday cut its benchmark interest rate by a full percentage point to near zero and will increase its bond holdings by at least $700 billion amid mounting fears over the coronavirus outbreak.

"The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States," the Fed said in a statement after an emergency policy meeting, adding global financial conditions have also been "significantly affected."

The central bank noted that the effects of the coronavirus will "weigh on" US economic activity in the near term and pose risks to the economic outlook. Therefore, the Federal Open Market Committee (FOMC), the Fed's policy-making committee, decided to lower the target range for the federal funds rate to 0-0.25 percent.

"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," said the Fed.