The Federal Reserve announced today that it is taking new action to “support the flow of credit” to households and businesses. It will continue to purchase Treasury securities and mortgage backed securities in amounts necessary to “support smooth market functioning.”
“The coronavirus pandemic is causing tremendous hardship across the United States and around the world,” the Fed said in a statement released this morning. “Our nation’s first priority is to care for those afflicted and to limit the further spread of the virus. 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.”
Additional plans include new programs that will provide billions in new financing and equity to employers, consumers, and businesses.
“The Fed’s action represents an open-ended and unlimited expansion of quantitative easing to control interest rates,” said NAHB Chief Economist Robert Dietz. “The central bank’s role of lender of last resort has been expanded to be buyer of last resort in order to support liquidity and the operation of financial markets. The Fed clearly intends to use its full powers to support the economy during an extremely disruptive phase.”
