Fed announces unlimited bond purchases in unprecedented move to help U.S. economy
Source: Washington Post
The Federal Reserve announced Monday an unlimited expansion of bond purchasing programs to backstop the credit markets, as millions of American households and businesses are getting crushed by the economic shutdown due to the spreading coronavirus. The Fed said it would purchase Treasurys and mortgage-backed securities “in the amounts needed to support smooth market functioning,” an indication the central bank is willing to do a lot more than the $700 billion in new purchases announced last week.
This is an extraordinary move that effectively puts no limits on assets the Fed is willing to buy, an effort to goes even further than the 2008-09 financial crisis playbook. In a series of sweeping moves, the Fed has taken bold action to ensure companies, cities and households have access to credit. On Monday, the Fed said it also expects to announce “the establishment of a ‘Main Street Business Lending Program’ to support lending to eligible small businesses” in the near future, another unprecedented step.
“The Federal Reserve is committed to using its full range of tools to support households, businesses, and the U.S. economy overall in this challenging time," Fed leaders wrote in a statement. These move come as Congress has stalled on a major $1.8 trillion relief package for the nation and markets around the world plunged again. St. Louis Fed President James Bullard predicted Sunday that unemployment could hit 30 percent in the second quarter, a higher level than during the Great Depression.
“It has become clear that our economy will face severe disruption,” the Fed said. “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.” The Fed also said Monday that it will support the commercial lending market by purchasing commercial mortgage-backed securities in addition to mortgage-backed securities made up of home loans.
Read more: https://www.washingtonpost.com/business/2020/03/23/fed-unlimited-credit-coronavirus/
Full headline: Fed announces unlimited bond purchases in unprecedented move to help U.S. economy weather coronavirus meltdown
Original article -
March 23, 2020 at 8:02 a.m. EDT
The U.S. central bank announced it would go beyond its prior commitment of $700 billion in bond purchases to buy “the amounts needed” to keep markets functioning and the economy stable. It also announced significant new programs to keep credit flowing to businesses and consumers, including loans for students, auto buyers and small businesses.
This is a developing story. It will be updated.
https://www.washingtonpost.com/news/business/wp/2020/03/23/fed-announces-unlimited-bond-purchases-in-unprecedented-move-to-help-u-s-economy-weather-coronavirus-meltdown/
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