The Fed announces unlimited bond-buying, sets up program to stimulate companies and local governments, in order to combat coronavirus fallout

Photo by Mark Wilson/Getty ImagesWASHINGTON, DC – SEPTEMBER 26: Federal Reserve Board Chairman Jerome Powell arrives for a news conference on September 26, 2018 in Washington, DC. The Fed raised short-term interest rates by a quarter percentage point as expected today, with market watchers expecting one more increase this year and three more in 2019.
  • The Federal Reserve announced on Monday new programs to aid the US economy amid the coronavirus pandemic.
  • The programs include unlimited bond buying as well as three facilities to support businesses, consumers, and employers.
  • “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 Fed said in a statement Monday.
  • Read more on Business Insider.

The Federal Reserve on Monday announced an array of new programs intended to prop up the US economy, stimulate companies and local governments, and smooth markets and the flow of credit amid the coronavirus outbreak.

“While great uncertainty remains, it has become clear that our economy will face severe disruptions. 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 Fed said in a statement Monday.

The Fed will purchase Treasuries and agency mortgage-backed securities “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.” Previously, the Fed had announced that it would buy $US500 billion of Treasury securities and at least $US200 billion of mortgage-backed securities.


Read more: ‘Massive implications’: One market bear breaks down how the Fed’s unprecedented actions before the coronavirus turmoil may have opened the door to a 72% crash

To support businesses, consumers, and employers, the Fed will provide up to $US300 billion in new financing, including $US30 billion from the Department of the Treasury, using the Exchange Stabilisation Fund. The Fed will also establish two facilities to support credit to large employers, and a third facility to support the flow of credit to consumers and businesses.

In addition, the Fed expects to soon announce a Main Street Business Lending Program to support lending to eligible small and medium-sized businesses, complementing efforts by the Small Business Administration.

This is a breaking news story. Please refresh for updates.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.