Saying “aggressive action” was needed to combat the coronavirus pandemic, the Federal Reserve announced this morning that it would purchase an unlimited amount of Treasury bonds and securities tied to home and business mortgages. The goal is to prop up the economy and ward off a credit crunch.
The Fed said it would buy assets “in the amounts needed” to support smooth market functioning and effective transmission of monetary policy. It had previously set a $700 billion limit for its asset purchase programs.
In addition, the Fed announced several new lending programs worth $300 billion to support all corners of the financial markets. The market apparently was very happy with these moves, as Dow futures accelerated after the announcement was made.