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The Federal Reserve announced a broad slate of programs to make sure credit flows to businesses and consumers as coronavirus safety measures cripple the economy.
Why it matters: The Fed’s announcement early Monday is the most aggressive step so far this year — and the markets responded in kind, with futures rising steeply ahead of the market's open.
Details: The Fed said its previously announced plan to purchase treasury and mortgage-backed securities — a program called quantitative easing — would be unlimited.
- For the first time, the Fed will dip its toes into the corporate bond market by contributing to a lending facility that will be used to buy corporate bonds issued by highly rated companies.
- The measures go beyond those used during the 2008 financial crisis.
The Fed also expanded its buying to include government-backed commercial real estate debt.
- It will lend to investors who want to purchase securities backed by consumer debt, including auto and credit card loans.
- In coming days, the Fed said, it will launch a program directly aimed at Main Street — to support loans to small businesses.
The state of play: Last night, amid President Trump's news conference about the status of efforts to fight COVID-19, stock futures plunged the most allowed. While the losses faded overnight, futures turned positive after the Fed’s announcement.
- The Fed says the programs will provide $300 billion in new financing.
- Treasury Secretary Steven Mnuchin told CNBC Monday morning that Congress was "very close" to passing a stimulus package.
What they’re saying: “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 central bank said in a statement.