- Title: Fed reacted quickly and innovatively to coronavirus crisis - analyst
- Date: 23rd March 2020
- Summary: OCEAN GROVE, NEW JERSEY, UNITED STATES (MARCH 23, 2020) (REUTERS VIA SKYPE) (SOUNDBITE) (English) BANNOCKBURN GLOBAL FOREX, MANAGING DIRECTOR, MARC CHANDLER, SAYING: "Is the goal to stop the stock market from falling? Probably not. Is the goal to help support the Treasury bond market? Maybe. Is it to help support the economy? Probably. And so I think that how do we look to see if the Fed is being effective? I'm not sure that the Dow Jones or the S&P 500 is the best metric to use. I think that it could hit like one of these things, like how we are preparing for ourselves and our families. If we... if we react very strongly and do the right protocols about washing your hands and all those kinds of things and a virus doesn't hit us, then did we overreact? And then I think what happens is if somebody in our family, some loved one, catches it, we think, well, maybe we didn't act strong enough. So I think in one of these things, I think that it's hard to see the immediate impact, helping to offset the selling pressure in stocks or the weakening of the economy. This, this Thursday, we're going to get the weekly initial jobless claims. And no matter what the Federal Reserve did this week or last week, we're going to see a huge jump in weekly initial jobless claims."
- Keywords: Bannockburn Fed Federal Reserve Jerome Powell Marc Chandler credit for households small businesses and major employers
- Reuters ID: LVA004C69XLJB
- Location: OCEAN GROVE, NEW JERSEY, WASHINGTON, D.C., UNITED STATES
- City: OCEAN GROVE, NEW JERSEY, WASHINGTON, D.C., UNITED STATES
- Country: USA
- Duration: 00:01:12
- Aspect Ratio: 16:9
- Topics: Economic Events
- Story Text: The U.S. Federal Reserve on Monday (March 23) rolled out an extraordinary new array of programs aimed at blunting the "severe disruptions" to the economy caused by the coronarvirus outbreak, backstopping an unprecedented range of credit for households, small businesses and major employers.
In a series of actions the Fed agreed to historical measures that would see it for the first time back the purchases of corporate bonds and direct loans to companies, expand its asset holding by as much as needed to stabilize financial markets, and roll out "soon" a program to get credit to small and medium-sized business.
It marks both a massive intervention into the U.S. economy by the central bank, and an quickly conceived move to adapt to the fact that the U.S. economy may need to shut its doors to keep people safe.
And according to one analyst, "the Federal Reserve should be commended," for the action. The Fed is "building on the playbook that it developed in the '08/09 crisis, but extending it," the Global Forex Managing Director, Marc Chandler, told Reuters.
Under the new programs, the Fed will lend against student loans, credit card loans, and U.S. government backed-loans to small businesses, and buy bonds of larger employers and make loans to them in what amounts to four years of bridge financing.
Nearly a third of the U.S. population is subject to new rules that close non-essential businesses and discourage people from leaving their homes in order to slow the spread of the virus. Hundreds of thousands of people have already filed for unemployment insurance in California alone, the state's governor said at the weekend, and many analysts are projecting declines in economic output next quarter that are far worse than the steepest drop during the Great Recession.
(Production: Aleksandra Michalska)
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