Keeping up with monetary policy measures announced by the Fed and other central banks around the world is no small task.
Monetary Policy
Here are some of the major recent announcements, but this list is far from exhaustive and doesn’t include a growing number of rate cuts by central banks around the world:
March 20th: Coordinated central bank action to further enhance the provision of U.S. dollar liquidity
“The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing a coordinated action to further enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements.”
March 20th: Federal Reserve Board expands its program of support for flow of credit to the economy by taking steps to enhance liquidity and functioning of crucial state and municipal money markets
“The Federal Reserve Board on Friday expanded its program of support for the flow of credit to the economy by taking steps to enhance the liquidity and functioning of crucial state and municipal money markets. Through the Money Market Mutual Fund Liquidity Facility, or MMLF, the Federal Reserve Bank of Boston will now be able to make loans available to eligible financial institutions secured by certain high-quality assets purchased from single state and other tax-exempt municipal money market mutual funds.”
March 19th: Asset Purchase Facility (APF): Asset Purchases and TFSME - Market Notice 19 March 2020
“At its special meeting on 19 March, the MPC judged that a further package of measures was warranted to meet its statutory objectives. It therefore voted unanimously to increase the Bank of England’s holdings of UK government bonds and sterling non-financial investment-grade corporate bonds by £200 billion to a total of £645 billion, financed by the issuance of central bank reserves; and to reduce Bank Rate by 15 basis points to 0.1%. The Committee also voted unanimously that the Bank of England should enlarge the Term Funding Scheme with additional incentives for SMEs (TFSME).”
March 18th: ECB announces €750 billion Pandemic Emergency Purchase Programme (PEPP)
“This new Pandemic Emergency Purchase Programme (PEPP) will have an overall envelope of €750 billion. Purchases will be conducted until the end of 2020 and will include all the asset categories eligible under the existing asset purchase programme (APP).”
March 17th: Federal Reserve Board announces establishment of a Primary Dealer Credit Facility (PDCF) to support the credit needs of households and businesses
“To support the credit needs of American households and businesses, the Federal Reserve Board on Tuesday announced that it will establish a Primary Dealer Credit Facility, or PDCF. The facility will allow primary dealers to support smooth market functioning and facilitate the availability of credit to businesses and households.”
March 17th: HM Treasury and the Bank of England launch a Covid Corporate Financing Facility (CCFF)
“The CCFF will provide funding to businesses by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy. It will help businesses across a range of sectors to pay wages and suppliers, even while experiencing severe disruption to cashflows.”
March 15th: FOMC: “The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
Additionally, the Fed announced a new round of QE on March 15th: “To support the smooth functioning of markets for Treasury securities and agency mortgage-backed securities that are central to the flow of credit to households and businesses, over coming months the Committee will increase its holdings of Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion.”
Related note: Bloomberg reports that “Since announcing the move, the central bank bought $272 billion of Treasuries and $68 billion of mortgage-backed securities this week, according to New York Fed data compiled by Bloomberg Intelligence and Bloomberg News.”
Fiscal Policy
There’s been no shortage of activity on the fiscal stimulus side of the equation either. Some of the implemented and proposed policy developments include:
March 20th: Wall Street Journal: “Negotiations on a massive economic stimulus package hit snags on how to provide assistance to Americans during the coronavirus pandemic as a target to reach a bipartisan agreement by Friday slipped. Among the chief remaining obstacles to an agreement on the legislation, which could ultimately cost more $1 trillion, was deciding on whether to give cash payments directly to some Americans, expand unemployment insurance or some combination of the two.”
March 20th: Treasury, IRS, and Labor Announce Plan to Implement Coronavirus-Related Paid Leave for Workers and Tax Credits for Small and Midsize Businesses to Swiftly Recover the Cost of Providing Coronavirus-Related Leave
“Today the U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor (Labor) announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act (Act), signed by President Trump on March 18, 2020.”
March 18th: Bill Announcement
“On Wednesday, March 18, 2020, the President signed into law: H.R. 6201, the “Families First Coronavirus Response Act,” which provides for supplemental appropriations related to the COVID-19 public health emergency, as well as waivers and modifications of Federal nutrition programs, employment-related protections and benefits, health programs and insurance coverage requirements, and related tax credits during the COVID-19 public health emergency.”
March 12th: SBA to Provide Disaster Assistance Loans for Small Businesses Impacted by Coronavirus (COVID-19)
“SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for a small business. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.”
March 6th: President Trump Signs Coronavirus Spending Bill
“President Trump signed into law an $8.3 billion bill for fighting the coronavirus outbreak, funding efforts to develop a vaccine and assisting local and state governments’ responses, as officials said they were also weighing steps to bolster the U.S. economy.”
For more information about economic stimulus measures and ISRI’s actions on behalf of recyclers, please see the ISRI Member Alert released on March 18, 2020.