WASHINGTON (AP) – The Federal Reserve is unleashing its boldest effort yet to protect the U.S. economy from the coronavirus by helping companies and governments pay their bills and survive a devastating crisis.
With lending in Treasury and mortgage markets threatening to shut down, the Fed announced an aggressive set of programs Monday to try to smooth out those markets. To do so, it committed to buy as much government-backed debt as it deems necessary. And for the first time ever, the Fed said it plans to buy corporate debt, too.
Its intervention is intended to ensure that households, companies, banks and governments can get the loans they need at a time when their own revenue is fast drying up as the economy stalls.
The Fed’s all-out effort to support the flow of credit through an economy ravaged by the viral outbreak has now gone beyond even the extraordinary drive it made to rescue the economy from the 2008 financial crisis.
The announcement initially lifted stocks in early trading. But rancorous talks in Congress over a $2 trillion rescue package – and uncertainty over when any agreement might be reached – depressed shares about 2.5% in volatile midday trading.