Fed may have more ammunition yet to help the US economy – The National

Fed may have more ammunition yet to help the US economy – The National

The Federal Reserve may not be done with its all-out blitz to help the US economy survive a coronavirus-induced shutdown, even after launching an unprecedented $2.3 trillion in lending programmes.. The central bank used up only about 40 per cent of the as much as $454 billion in seed capital that Congress provided it in extending help to small and mid-sized businesses, state and local governments and some risky corners of the financial markets on Thursday.. Investors largely welcomed the Fed's moves Thursday.. For now, though, the pressure from many politicians and investors is for the central bank to do more, not less.. One area that the Fed itself flagged for potential further action: state and local government financing.. The Fed estimated that $40bn of junk bonds currently fit that description, though the debt must also mature in less than five years to be eligible.. The central bank had no estimate for what portion satisfied both criteria.. The limited push into junk bonds will also open the door to some purchases of exchange-traded funds that invest in those bonds.. Because such funds may include even riskier holdings, the Fed will backstop the purchases at a ratio of $1 to every