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Fed Chairman Jerome Powell at a press conference in March. Photo: Eric Baradat/AFP via Getty Images

The Federal Reserve announced Thursday that it will support the coronavirus-hit economy with up to $2.3 trillion in loans to businesses, state and city governments — made possible in part by Treasury funds set aside in the government stimulus package.

Why it matters: It adds to the number of huge, unprecedented steps the Fed has taken during the coronavirus outbreak to blunt the effects of the resulting economic shutdown. Its actions to date are bigger than any seen during other crises in U.S. history.

The fresh Fed programs include financial support for:

  • Businesses: The Fed's Main Street Lending Program will allow for $600 billion in loans — provided through banks — to companies with as many as 10,000 workers but under $2.5 billion in revenue last year. The terms of these loans may not be as appealing as those offered under the Paycheck Protection Program (PPP) for smaller businesses (with under 500 workers), though smaller companies are still eligible. The program is expected to launch in coming weeks.
  • State and municipalities: A Fed facility will buy as much as $500 billion of short-term debt from certain states, cities and counties — a measure meant to shore up municipalities that are seeing revenues slide.

Of note: The Fed also announced a separate facility specifically for the banks handing out PPP loans to struggling mom-and-pop businesses — and it hinted that it might open up that facility to nontraditional lenders.

The Fed also broadened previously announced backstop programs to include riskier debt. The facilities are meant to support critical funding markets for big businesses that have taken a hit as a result of the coronavirus.

The backdrop: The slew of new Fed programs comes as economic conditions deteriorate at an unprecedented pace.

  • This morning, another 6.6 million Americans filed for unemployment benefits this week, adding to the whopping 10 million who have filed jobless claims in recent weeks.

Between the lines: The Fed is limited in its ability to provide direct relief — it leaves that to Congress — but it uses Treasury Department funds to support key markets, insuring against losses.

What they're saying: "Our actions today will help ensure that the eventual [economic] recovery is as vigorous as possible," Fed Chair Jerome Powell said in a press release.

  • Powell said in a webcast interview with the Brooking Institution's David Wessel on Thursday morning that it's time to talk about a plan for reopening the economy, so as to avoid a "false start."

Go deeper

Dion Rabouin, author of Markets
16 mins ago - Economy & Business

Stock buybacks are kicking back into high gear

Illustration: Aïda Amer/Axios

It was expected that with the economy improving and company balance sheets already loaded with cash, U.S. firms would slow down their debt issuance in 2021 after setting records in 2020. But just the opposite has happened.

Why it matters: Companies generally issue bonds for one of two reasons — because they're worried about not having enough cash to cover their expenses or because they want to lever up and make risky bets.

Ben Geman, author of Generate
1 hour ago - Energy & Environment

Japan vows deeper emissions cuts ahead of White House summit

Japanese Prime Minister Yoshihide Suga. Photo: Carl Court/Getty Images

Japan on Thursday said it will seek to cut greenhouse gas emissions by 46% below 2013 levels by 2030, per the AP and other outlets.

Why it matters: The country is the world's fifth-largest largest carbon dioxide emitter and a major consumer of coal, oil and natural gas.

2 hours ago - Technology

The global race to regulate AI

Illustration: Annelise Capossela/Axios

Regulators in Europe and Washington are racing to figure out how to govern business' use of artificial intelligence while companies push to deploy the technology.

Driving the news: On Wednesday, the EU revealed a detailed proposal on how AI should be regulated, banning some uses outright and defining which uses of AI are deemed "high-risk."