This article originally appeared on The Council of Foreign Relations Website.
Acknowledging the enormous threat to jobs and incomes posed by the coronavirus epidemic, the Federal Reserve on March 23 pledged to use “its full range of authorities to provide powerful support for the flow of credit to American families and businesses.” Swift and bold action has backed up these words.
The Fed slashed its policy rate to zero and, more importantly, committed to buying Treasuries and mortgage-backed securities without limit. It is also putting cash directly into companies’ hands. On March 17 it restarted a financial-crisis program for purchasing commercial paper—debt that companies issue to meet short-term obligations. And on March 23 it unveiled plans to start buying corporate bonds—for the first time ever.