Corona crisis in the US: Fed extends emergency program – $ 2.3 trillion aid package

by

In the face of the corona pandemic, the US Federal Reserve wants to support the US economy with crisis aid worth billions.

The Fed announced in Washington on Thursday that it would pump a total of up to $ 2.3 trillion into the economy through various loan programs. “The role of the Fed is to offer as much relief and stability as we can,” said Fed Chairman Jerome Powell in a statement.

The measures are intended, among other things, to support small and medium-sized enterprises as well as municipalities and cities. Specifically, it is about emergency loans as part of the so-called Main Street Lending Program, which is part of an economic stimulus package approved by the US Congress in March. The central bank’s crisis relief was well received by investors – the US stock markets reacted with significant price gains, the leading Dow Jones index opened 300 points up.

The measures now presented by the Fed include the purchase of short-dated municipal bonds by the central bank. The purchase amount benefits the municipalities and cities. This program is worth up to half a trillion dollars. The Fed is also launching a loan program for small and medium-sized businesses with a volume of up to $ 600 billion. In addition, several existing loan programs are being expanded.

The Fed had already responded to the corona pandemic with drastic rate cuts and other measures. Only on Wednesday did the US Federal Reserve signal a longer zero interest rate policy. The key interest rate will remain at zero percent until the economy has overcome the crisis, according to the minutes of the extraordinary interest rate meeting on March 15. The economic outlook is associated with an “extremely large amount” of uncertainty.

The interest rate meeting was brought forward because of the corona crisis. At that time, the Fed cut its key interest rate by 1.0 percentage point to a range of 0 to 0.25 percent. An extensive range of securities was also launched. The Fed had already cut interest rates by 0.50 percentage points at an unscheduled meeting in early March.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.