Federal Reserve announces open-ended QE and expansion of lending programs

In an announcement this morning, the Federal Reserve (Fed) revealed extensive new measures to support the economy. The headline reveal was that the Fed’s previously announced $700 billion in asset purchases will now be open-ended to support markets and the economy. Additionally, the Fed announced the establishment of three new lending facilities to support corporations, small businesses, and consumers, and the expansion of two of its already existing money market mutual fund and commercial paper facilities.

Why it matters:

• The Open Market Trading Desk at the Federal Reserve Bank of New York will now purchase $125 billion in Treasuries and Mortgage Back Securities per day this week. By the end of the week, the Fed will have already purchased $1 trillion in assets since it began asset purchases on March 15.
• The move sets the stage for unlimited monetization of treasury issuances, supporting any fiscal stimulus congress may agree to in the coming days and weeks.