Region:
United States
Category:
Economy

Fed mounts aggressive new steps to combat coronavirus hit to economy

  • Fed mounts aggressive new steps to combat coronavirus hit to economy
    Fed mounts aggressive new steps to combat coronavirus hit to economy
Region:
United States
Category:
Economy
Author/s:
By BBC
Publication date:
Print article

The Federal Reserve has stunned the markets by pledging to inject as much money into the economy as needed, and to prop up the credit market too. It’s a massive moment, says AXA’s chief economist Gilles Moec.

The U.S. Federal Reserve on Monday said it would begin backstopping an unprecedented range of credit for households, small businesses and major employers in an effort to offset the “severe disruptions” to the economy caused by the coronarvirus outbreak.

The steps include establishment of new programs that will lend against student loans, credit card loans, and U.S. government backed-loans to small businesses, as well as new programs to buy bonds of larger employers and make loans to them.

Existing purchases of U.S. Treasury and mortgage-backed securities will be expanded as much as needed “to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.”

In a statement the Fed said the effort, approved unanimously by members of the Federal Open Market Committee, was taken because “it has become clear that our economy will face severe disruptions” as a result of the health crisis.