Unprecedented stimulus to the Federal Reserves balance sheet of more than $5 trillion for the first time

category:Finance
 Unprecedented stimulus to the Federal Reserves balance sheet of more than $5 trillion for the first time


In addition, the Federal Reserve has launched two new tools: primary market corporate credit facility (pmccf) for the issuance of new bonds and loans and secondary market corporate credit facility (smccf) for the liquidity of outstanding corporate bonds.

With regard to bond and MBS purchases, which are of the most concern to the market, the Federal Reserve said in a statement on Monday:

The FOMC is taking further action to support the flow of credit to households and businesses by addressing market pressures on treasury bonds and proxy mortgage-backed securities. The Federal Reserve will continue to purchase the necessary size of treasury bonds and institutional mortgage-backed securities to support smooth market operation and effectively transmit monetary policy to the broader financial environment. The Commission will include the purchase of MBSS in its purchases of MBSS. In addition, the open market service desk will continue to provide large-scale overnight and term repo operations. The committee will continue to closely monitor market conditions and will assess the appropriate pace of its securities purchases at future meetings.

The FOMC is taking further action to support the flow of credit to households and businesses by addressing market pressures on treasury bonds and proxy mortgage-backed securities. The Federal Reserve will continue to purchase the necessary size of treasury bonds and institutional mortgage-backed securities to support smooth market operation and effectively transmit monetary policy to the broader financial environment. The Commission will include the purchase of MBSS in its purchases of MBSS. In addition, the open market service desk will continue to provide large-scale overnight and term repo operations. The committee will continue to closely monitor market conditions and will assess the appropriate pace of its securities purchases at future meetings.

Since the Fed did not set a ceiling on its purchases of these assets in its statement, the market saw the Feds statement as a hint that it could be infinitely loose in the future.