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Why the Pandemic Showed Fed Matters in Crisis-hit Markets

January 2, 2021 by Forex Winner Leave a Comment

Why the Pandemic Showed Fed Matters in Crisis-hit Markets

Fed’s action during the early days of the coronavirus pandemic stemmed a rout in markets and kept financial costs low, according to Reuters. Fed  restored trust in fragile moments, proving its critics wrong of role in preventing financial crisis.

Why the Pandemic Showed Fed Matters in Crisis-hit Markets
  • When the coronavirus crisis intensified in March, Fed’s initial moves propped up trading in Treasury bonds, short-term corporate loans, and other essential financial instruments.
  • Fed has been lauded for its fast response to the coronavirus crisis, with analysts calling it a “happy outcome” as markets limp to their feet again from the pandemic  impacts
  • Analysts believe it took less than anticipated to help the economy, with the Fed’s balance sheet expected to top $10 trillion by the end of 2020, better than feared, up from $4.2 trillion in mid-March.
  • Fed’s lending programs, which ends on December 31, also attracted modest interest, much less than expected 
  • Analysts also point out that the crisis forced greater cooperation between the Fed and Treasury, which could help them work to keep government borrowing costs low.
  • The Fed’s response was a stark contrast to the 2007-2009 financial crisis when it took roughly four years to scale up three successive programs of “quantitative easing.”

U.S. stocks are currently gaining. SPY is up 0.18%, QQQ: NASDAQ is up 0.36%

Filed Under: Forex News Tagged With: coronavirus, Fed, NASDAQ, QQQ, SPY

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