At 8am this morning, the Fed unleashed another salvo to try to shore up the market and the economy.
This time, the Fed took the unprecedented steps of expanding the assets it will be buying from just Treasury bonds to corporate and municipal bonds. This will serve to shore up the balance sheets of private businesses as well as municipalities.
It’s a small step away from buying corporate debt to buying stocks. The Fed has not announced that move yet, but it now seems like it’s likely.
The Fed also removed its past limits on asset buying, making this new round of quantitative easing (QE) effectively unlimited in size.
That’s all in addition to the Fed’s March 15 announcement that it was cutting interest rates by a full percentage point, resuming QE, and cutting bank reserve requirements to zero. Two weeks before that, the Fed had cut rates by half a percentage point.