The balance sheet of the US Federal Reverse (Fed) hit a record $6.62 trillion this week as the central bank is pumping money to stimulate the US economy. The Fed has extended its power to buy government bonds, municipal bonds, and even corporate bonds to keep markets alive during the COVID-19 pandemic.
Last month, the American central bank cut the interest rates
to zero and launched the aggressive quantitative easing programmes under which
it buys US Treasury bonds. The Fed opened an unprecedented series of programs
to inject cash into the markets.
As a result, the balance sheet rose by $200 billion compared
to $6.42 trillion the previous week. The balance sheet, which surged from $4.29
trillion in early March, is not equivalent of a third of the US economy before
the pandemic. Analysts anticipate it to grow even large in the coming weeks.
The Fed’s holding of Treasury securities increased from
$3.79 trillion to $3.91 trillion. The central bank’s exposure to mortgage-based
securities rose from $1.57 trillion to $1.62 trillion.
At the end of last month, the US Congress approved the Fed’s coronavirus rescue plan that will see the central bank issuing up to $4.5 trillion in emergency lending.