What's the Fed been upto? Well short answer is-- a lot! The Federal Reserve is the central bank of the US, independent of the federal government, and their actions govern the supply of money (which influences interest rates) in the economy. Since the emergency cut in the Federal Funds Rate on 3/3 (seems eons ago!), the Fed has expanded their reach far into financials markets, way beyond their usual dealings in U.S Treasury Securities. This is what we call "quantitative easing." They are now purchasing corporate bonds, municipal bonds, mortgage backed securities, commercial paper as well as trying to alleviate demand for dollars in foreign exchange markets.
They are being an (aggressive) buyer of assets, when few others are, to keep the credit markets moving. This article from Yahoo Finance does a good job of recapping which parts of the financial system have been pulled into the Fed's orbit. (In the picture below, if you want to know more about what some the finance terminology means, Investopedia is a good reference).
Other than these "Wall Street" actions, the Fed in a unusual move, is also directly helping "Main Street" by providing loans to small and medium businesses.
After all this monetary policy action, the ball is now in the court of the federal government to provide fiscal policy stimulus via the giant trillion dollar package in Congress right now.
They are being an (aggressive) buyer of assets, when few others are, to keep the credit markets moving. This article from Yahoo Finance does a good job of recapping which parts of the financial system have been pulled into the Fed's orbit. (In the picture below, if you want to know more about what some the finance terminology means, Investopedia is a good reference).
Other than these "Wall Street" actions, the Fed in a unusual move, is also directly helping "Main Street" by providing loans to small and medium businesses.
After all this monetary policy action, the ball is now in the court of the federal government to provide fiscal policy stimulus via the giant trillion dollar package in Congress right now.
