In another busy morning for the Federal Reserve we have seen it expand its tool kit further by announcing a US$2.3 trillion package, including loans for small businesses and municipalities to help bridge the economic disruption caused by the Covid-19 pandemic. We have also heard directly from Fed Chair Jerome Powell in a webcast about the importance of fiscal policy working together with monetary policy at this current time of crisis. Powell argues that the Fed's direct responsibility is “providing a measure of relief and stability… and by using our tolls to ensure that the eventual recovery is as vigorous as possible”. In this regard he focuses on the policy measures of rate cuts and asset purchases in an effort to “safeguard financial markets in order to provide stability to the financial system and support the flow of credit in the economy”.
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Recent Federal Reserve balance trends