US Fed Intervenes Again... New York Stock Market Narrows Losses

[Asia Economy New York=Correspondent Baek Jong-min] The U.S. central bank, the Federal Reserve (Fed), has announced a large-scale liquidity supply to stabilize the financial market turmoil caused by the novel coronavirus infection (COVID-19). This shows a strong determination to block financial market chaos.

On the afternoon of the 12th (local time), the New York Federal Reserve Bank, which is in charge of the Fed's 'open market operations' policy, unveiled measures to stabilize the short-term financial market.

First, the scope of Treasury bond purchases, which had been implemented at $60 billion per month, will be expanded to include short-term bonds with maturities of one year or more. Inflation-Protected Securities (TIPS) will also be included in the purchase targets. This measure is effective from today until April 13.

The New York Fed will also expand repurchase agreement (Repo) transactions for 3-month and 1-month maturities to $500 billion. The $175 billion ultra-short-term repo transactions are separate. Repo transactions involve purchasing bonds with the condition of reselling them within a certain period. When the monetary authorities purchase bonds, liquidity is supplied to the market accordingly.

The New York Fed's market-related measures this week are already the third. Today's measures are the strongest among them. This means that the Fed is closely monitoring the market situation.

The New York Fed stated in a press release, "This measure is intended to manage the turmoil in the Treasury market caused by COVID-19."

The U.S. stock market, which had been plunging due to disappointment over President Donald Trump's speech the previous day, reacted positively to the Fed's intervention. After the New York Fed's announcement, the major indices of the New York Stock Exchange, which had been falling nearly 10%, reduced their losses to around 6%.

This content was produced with the assistance of AI translation services.