Federal Reserve Board Provides Support for the Economy

The Federal Reserve Board ("FRB") Federal Open Market Committee ("FOMC") implemented a series of steps to safeguard the economy against risks posed by the coronavirus.

In a statement released by the FOMC on March 15, the Federal Reserve announced a number of action steps to:

• increase holdings of (i) Treasury securities by at least $500 billion and (ii) agency mortgage-backed securities by at least $200 billion;

• reinvest all principal payments from the FRB's holdings in agency mortgage-backed securities related to agency debt and agency mortgage-backed securities;

• widen the scope of its operations for its overnight and term repurchase agreements; and

• open the discount window to primary dealers, including broker-dealers, and accept a variety of instruments from such dealers, including equity securities.

In a parallel action, the FRB - in coordination with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank - said it will enhance the liquidity swap line arrangements for the standing U.S. dollar, effective March 16, 2020. Also, the FRB: (i) approved a one to one-half percentage point decrease for the primary credit rate to one-quarter of a percent; and (ii) authorized the FOMC to direct the Open Market Desk at the Federal Reserve Bank of New York indefinitely. The actions are effective on March 16, 2020.