The Federal Reserve has just said that it will launch a swathe of programs targeting the markets in the wake of the coronavirus crisis.
Among the initiatives is an unspecified lending program for Main Street businesses and the Term Asset-Backed Loan Facility implemented during the financial crisis.
There will be a program worth $300 billion “supporting the flow of credit” to employers consumers and businesses and two facilities set up to provide credit to large employers.
Markets have reacted positively to the move, with Bitcoin exploding upwards to $6400 from an overnight low of $5600
“We are now in QE infinity, again,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, said in a note.
Additional measures include the issuance of asset-backed securities backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration and certain other assets.
“The coronavirus pandemic is causing tremendous hardship across the United States and around the world. Our nation’s first priority is to care for those afflicted and to limit the further spread of the virus,” the Fed said in a statement. “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.”
Today’s announcement represents the most powerful market intervention the Fed has made up to now.
Previously, it had announced it would buy $500 billion worth of Treasurys and $200 billion in MBS. The new move represents an open-ended commitment to the QE program.
The programs are backed by the Treasury Department to ensure the Fed does not lose money.
“We are committed to providing relief for American workers and businesses, particularly small and medium size businesses and critical industries that are most impacted by the coronavirus. We will take all necessary steps to support them and protect the U.S. economy,” Treasury Secretary Steven Mnuchin said in a statement.