As the U.S. tumbles into a coronavirus recession, the Federal Reserve is using its nearly unlimited power to generate cash to cushion the fall. The Fed 'is really throwing out all the stops,' one analyst says.
Led by Jerome Powell, the Federal Reserve has moved quickly and creatively to pump money into the rapidly shrinking U.S. economy.Led by Jerome Powell, the Federal Reserve has moved quickly and creatively to pump money into the rapidly shrinking U.S. economy.As the United States tumbles into a coronavirus recession, the Federal Reserve is using its nearly unlimited power to generate cash to cushion the fall.
"The Fed is doing everything they can to keep financial markets functioning and credit available to households and firms," former Fed Chair Janet Yellen said during a forum organized by the Brookings Institution. Since the middle of March, the Fed has purchased more than $1.2 trillion in Treasurys and mortgage-backed securities, and the central bank has made it clear that it will continue buying as much as necessary to keep credit markets from seizing up.
With help from the Treasury Department, the Fed is also branching into nontraditional markets. It will now lend money directly to corporations. And it's preparing to roll out a"Main Street" program to help finance smaller firms."The Federal Reserve is really throwing out all the stops in an effort to contain a health crisis from becoming an economic or financial crisis," said Greg McBride, chief financial analyst for Bankrate.com."Issue No.
The Fed's actions have made a difference, preventing the financial pipes from clogging up, though credit is still harder to come by than it was before the crisis. The challenge now is whether the central bank can extend its helping hand to ordinary businesses whose customers have suddenly disappeared.passed by Congress to address the coronavirus fallout includes $454 billion to backstop Fed lending programs. That should allow the central bank to pump as much as $4 trillion into the economy.
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