U.S. unemployment rate may skyrocket to 30% amid 'huge shock' to economy

U.S. unemployment rate may skyrocket to 30% amid 'huge shock' to economy

In particular, the Fed revealed that it will be purchasing assets "in the amounts needed" to ensure the markets are functioning well amid the coronavirus pandemic.

The Fed is creating new programs for the almost 5,200 FDIC- insured USA banks, as well as finance companies and corporations to stave off business bankruptcies and keep employee paychecks flowing.

The Fed also said it "expects to announce soon the establishment of a Main Street Business Lending Programme to support lending to eligible small-and medium-sized businesses, complementing efforts" by the Small Business Administration.

The Fed announced that it was suspending its previous guidance on quantitative easing, which sought to buy "at least" $500 billion in U.S. Treasuries and $200 billion in agency-backed mortgage-backed securities "over coming months".

"Our nation's first priority is to care for those afflicted and to limit the further spread of the virus, the Fed statement on Monday said".

The Federal Reserve also established the Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance and the Secondary Market Corporate Credit Facility (SMCCF) as facilities to support large employer credit in both the primary and secondary markets.

COVID-19 has sent the global economy into a tailspin.

"This is a planned, organized partial shutdown of the U.S. economy in the second quarter", he told Bloomberg. But because of the harsh and accelerated impact of the virus to businesses of all sizes, many have called on the Fed to re-think the use of its toolkit, which has historically targeted the banking and finance industries. However, just hours before the United States stock market opened, the Federal Reserve announced that it will be buying an unlimited amount of Treasury bonds and mortgage-backed securities to tackle the "severe disruptions" caused by the novel coronavirus.

Finally, the Federal Reserve expanded the scopes of the Money Market Mutual Fund Liquidity Facility (MMLF) and the Commercial Paper Funding Facility (CPFF) to include additional assets.

The TALF is also structured as a special goal vehicle.

Through the Term Asset-backed securities Loan Facility (TALF), the Fed is accepting bundled groups of assets secured by auto loans, credit cards, student loans and other types of credit. The next scheduled FOMC meeting is April 29.

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