Fed to add $1.5 trillion in 'temporary liquidity' to Wall Street

Fed to add $1.5 trillion in 'temporary liquidity' to Wall Street

Fed to add $1.5 trillion in 'temporary liquidity' to Wall Street

For the Canadians, the plan to boost liquidity follows the biggest plunge in Canadian stock prices in eight decades on mounting concern about the scale of the economic hit from the coronavirus pandemic.

Expectations for a more significant rate cut have increased this week as the market decline deepened over fears about the economic fallout of the coronavirus crisis.

He said there was a "blow out" in the gap between bid and offer prices in Treasuries, which indicated an emerging liquidity crunch in what is normally one of the deepest and most liquid financial markets globally.

Its peer Barclays had also opined on Thursday that there can be a possibility of a rate cut between the policies.

Policymakers are next scheduled to meet March 17-18 in Washington.

BofA said the core inflation is well contained at 3.6 per cent as per the latest data print.

As for what the central bankers decide next week, "it matters not", he said, because rates are already very low and keeping liquidity flowing through cash injections is more important.

It said that the growth number for FY21 will come at 5.4 per cent, up from the 4.8 per cent in FY20.

The US Federal Reserve has tonight cut rates back to near zero, restarted bond buying and launched other measures from its crisis-era toolkit.

This is the second time in as many weeks the US Fed has cut interest rates as the deadly virus threatens to cause massive disruption to the world economy.

In a return of quantitative easing, the Fed plans to buy $500bn of United States government bonds and $200bn of mortgage-backed securities to smooth over market disruptions that have made it hard for banks and large investors to sell Treasuries. Over the weekend, the USA extended its travel ban to more countries and cases continued to surge in Europe, while airlines continue to take drastic measures to weather the collapse in travel.

The announcement fuelled a sharp uptick in the ailing stock market Thursday afternoon.

It could ramp up bond buying above the current $60 billion monthly pace.

On Thursday, the central bank shocked observers by announcing it would offer, in addition to its existing slate of loans to major banks, three repurchase agreements, or repos, that would provide eligible banks up to $500 billion per operation over an extended time horizon.

BoE says central banks will offer USA dollar swaps with an 84-day maturity, in addition to existing one-week operations. To further enhance the role of the discount window as a tool for banks in addressing potential funding pressures, the Board also today announced that depository institutions may borrow from the discount window for periods as long as 90 days, prepayable and renewable by the borrower on a daily basis.

The central banks in the US, the eurozone, Canada and Britain have all deployed stimulus.

"An ambitious and coordinated fiscal policy response is required to support businesses and workers at risk", European Central Bank President Christine Lagarde said Thursday in Frankfurt.

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