As the U.S. economy underwent a historic shutdown due to the pandemic, the Federal Reserve was...

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Economics

As the U.S. economy underwent a historic shutdown due tothe pandemic, the Federal Reserve was uncharacteristically bold andswift in pushing out initiatives, facilities, and decisions thathave monumental and unusual impacts on the economy, many of theseactions go beyond the usual mandate of monetary policy. Please do alittle research (including going to the Fed's website) and itemizethese actions, along with a brief statement of what each of themdoes; then add a statement about what you think could be anydownside of these actions.
Note: Answer has to be in 250-300 words. please do not copyand paste. try to write in your own words.

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3.7 Ratings (387 Votes)

It could get a bit lengthy but it is important to understanding detail what steps have been taken by the Fed to combat the slowdown in the economy You can pick and chose steps you feel are important to create the 250300 words answer The answer seems to be intimidating but believe me this is the best indepth explanation you can get Below is the detailed account with dates about what actions have been taken by the Fed on the monetary as well as fiscal side The US Federal Reserve has taken a number of significant measures to provide monetary stimulus On March 3 2020 it made an unscheduled cut to the fed funds rate It slashed rates by 05 double the amount of its recent moves and the largest cut since the 2008 financial crisis On March 12 the Fed massively expanded reverse repo operations adding 15 trillion of liquidity to the banking system This means that the Fed extended the amount of short term loans to banks to keep money markets markets for very short term loans stable and allow banks to have more cash on hand On March 15 It cut interest rates by a full percentage point down to a range of 000 to 025 This dropped the fed funds rate to the level it was before the rate increases starting in 2015 The Federal Reserve restarted quantitative easing with the purchase of 500 billion in treasuries and 200 billion in mortgagebacked securities The Fed lowered the interest rate on the discount window by 15 to 025 The discount window is another way the Fed lends to banks The Fed as part of a transition to a different type of bank reserves system lowered reserve See Answer

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