US Fed launches $2.3trn package to boost economy

WASHINGTON: The Federal Reserve on Thursday announced another series of financing facilities to provide $2.3 trillion to support the US economy amid the coronavirus pandemic.

The programs aim to help businesses, households and state and local governments facing a cash crunch as large parts of the economy have been shut down.

“The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible,” Federal Reserve Chair Jerome Powell said in a statement.The measures include changes and increases to existing programs, as well as new facilities.

To “ensure credit flows to small and mid-sized businesses,” the Fed opened a new Main Street Lending Program, to purchase up to $600 billion in loans owed by those firms, with the support of funding from the massive $2 trillion that Congress approved late last month.

According to the Fed, the program supports firms “that were in good financial standing before the crisis by offering 4-year loans to companies employing up to 10,000 workers or with revenues of less than $2.5 billion. Principal and interest payments will be deferred for one year.”

Treasury Secretary Seven Mnuchin said the program “will make a significant difference for the 40,000 medium-sized businesses that employ 35 million Americans.”

Treasury also is backing the new central bank program to “help state and local governments manage cash flow stresses caused by the coronavirus pandemic,” the Fed said This Municipal Liquidity Facility that will offer up to $500 billion in lending to states and municipalities, by directly purchasing short-term debt.