The US Federal Reserve (Fed) announced on April 9 a $2.3 trillion stimulus plan to help local governments and support small and medium-sized businesses. The US is struggling with the catastrophic consequences of the COVID-19 pandemic, and the central bank was forced to unleash its unlimited quantitative easing effort.
The latest injection of liquidity is aimed at companies of
up to 10,000 employees, which will be able to get four-year loans. Elsewhere,
state governments and several populous counties and cities will be able to
borrow directly from the Fed.
Fed Chairman Jerome Powell said that the central bank had no choice but to broaden its role beyond maintaining the markets liquid and functional and help the US pass through the coronavirus crisis.
He also warned that any reopening of the economy must not be
rushed. Previously, US President Donald Trump repeatedly downplayed the magnitude
of the pandemic, delayed the lockdown measures. Powell commented:
“People are
undertaking sacrifices for the common good. We should make them whole. They did
not cause this. This is what the great fiscal power of the United States is
for, to protect these people from the hardships they are facing.”
The Fed’s latest move boosted US stocks. Besides this, other
global equity indices also benefited as well.