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News >  Spokane

Fed unleashes groundbreaking measures to shore up reeling economy

Bloomberg

The Federal Reserve, racing again to contain mounting economic and financial-market fallout from the coronavirus, unveiled a sweeping series of measures that pushed the 106-year old central bank deeper into uncharted territory.

In a surprise announcement Monday before markets opened in New York, the U.S. central bank said it will buy unlimited amounts of Treasury bonds and mortgage-backed securities to keep borrowing costs at rock-bottom levels – and to help ensure chaotic markets function properly.

It also set up programs to ensure credit flows to corporations as well as state and local governments.

Following a string of emergency measures last week, the moves also increasingly push the central bank into new territory by providing direct support to U.S. employers, municipalities and households, which would traditionally be viewed as fiscal policy.

“Wow, just wow,” George Rusnak, head of investment management at Wells Fargo Private Bank, said on Bloomberg Television. “Hopefully you’ll come out of this with some fiscal stimulus as well, and you’ll be set with good growth opportunities in the long run.”

In a sign, however, of just how unnerved investors are by the pandemic, the Fed’s moves failed to spark anything beyond a brief rally in stocks and corporate bonds Monday after weeks of staggering losses.

Monday’s Fed action followed an already-dizzying number of steps taken by Chairman Jerome Powell in the past three weeks that would have been unthinkable just months ago.

They represent a dramatic reaction to the sudden stop inflicted on the economy by the contagion and by the subsequent panic among investors.

Group of 20 finance ministers and central bank chiefs separately joined an emergency call to work on a joint response to the economic blow dealt by the pandemic.

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