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Fed opens unlimited 'quantitative easing' to stabilize U.S. economy

Fed opens unlimited 'quantitative easing' to stabilize U.S. economy
A view of Wall Street in New York City on March 16. The Fed said Monday purchases of Treasury bonds and securities will be made "in the amounts needed to support smooth market functioning." Photo by John Angelillo/UPI | License Photo

March 23 (UPI) -- The Federal Reserve on Monday announced an all-out effort to support a U.S. economy stressed by the coronavirus pandemic by permitting unlimited buying of Treasury bonds and mortgage-backed securities.

The quantitative easing represents the greatest-ever expansion of the Fed's balance sheet.

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"The Federal Reserve is committed to using its full range of tools to support households, businesses, and the U.S. economy overall in this challenging time," the central bank said in a statement. "The coronavirus pandemic is causing tremendous hardship across the United States and around the world."

Saying "aggressive efforts" must be taken to "limit the losses to jobs and incomes," the Fed's Open Market Committee set no limits in its new move to buy Treasury bonds and mortgage-backed securities.

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The purchases would be made, it said, "in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy."

The Fed had previously committed to buying at least $500 billion of Treasury securities and at least $200 billion in mortgage-backed securities.

Other measures announced Monday include $300 billion to provide liquidity for the credit market, with the U.S. Treasury providing another $30 billion; two new facilities to support credit to large employers, including liquidity for outstanding corporate bonds; and support for consumer credit by allowing the issuance of securities backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration and certain other assets.

"The Federal Reserve will continue to use it full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals," the bank said.

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