Federal Reserve comes with a new measure to support the market
The measure aims to ensure that the short-term money market is not stalled due to concerns about the new corona virus.
The Fed has been taking action in the banking industry for some time, parts of which are “under stress”. This means that the costs of short-term loans are rising so sharply that it is increasingly difficult for companies to obtain money. On Tuesday, the Fed announced that it would buy certain corporate loans from non-financial institutions, because that market had almost come to a standstill.
The New York branch of the central bank umbrella also announced that it would pump another $ 1 trillion into the financial system every day through repos, a type of short-term loan with government bonds as collateral. The cash injections through these types of transactions have been increasing in recent days.
The Fed came up with one of its most notable interventions on Sunday. Chairman Jerome Powell announced a 1 percentage point cut in interest rates, in addition to buying up government bonds and bundled mortgage loans.