Mar 23, 2020 - Economy & Business

Fed unveils aggressive measures to shore up economy

Photo by Mark Makela/Getty Images

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.

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Fed says it will help business-funding market amid coronavirus outbreak

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The Federal Reserve said Tuesday it would intervene in a key market used by cash-strapped businesses for the first time since the financial crisis — a move intended to help corporations hurt by the coronavirus outbreak.

Why it matters: This market froze up in recent weeks, limiting businesses' ability to borrow at a time when the halt in economic activity is weighing on American corporations. It's the latest in a series of moves by the Fed to step in and ease that pain.

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Fed cuts interest rates to near zero in emergency coronavirus intervention

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The Federal Reserve on Sunday cut its benchmark interest rate to almost zero and launched a $700 billion quantitative easing program in response to the expected economic downturn and stock market slump caused by the coronavirus.

Why it matters: This is the most drastic measure the Fed could take to try to shield the economy amid a global pandemic. The central bank hasn’t made moves this dramatic since the financial crisis.

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The Fed's $1.5 trillion injection may be just the beginning

Data:; Chart: Axios Visuals

The Fed's actions on Thursday appear to have had a significant impact on the bond market and the currency market, where the dollar has reversed its slide against most major currencies after touching monthslong lows earlier this week.

The state of play: The dollar index, which measures the greenback's value against six global peers like the euro and Japanese yen, rose 1% Thursday.