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Federal Reserve to Inject $1.5 Trillion into Markets to Offset Economic Impact of Coronavirus

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The Federal Reserve on Thursday announced it would inject $1.5 trillion into short-term markets to offset the economic impact of the Wuhan coronavirus.

“These changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak,” the New York Fed said in a statement. “The terms of operations will be adjusted as needed to foster smooth Treasury market functioning and efficient and effective policy implementation.”

The liquidity injection follows instructions from Federal Reserve Chairman Jerome Powell.

President Trump has pushed the Fed to lower interest rates to combat the financial dislocation caused by the outbreak. However, he has also frequently criticized Powell, who he nominated for the position in 2017 at the urging of Treasury Secretary Steve Mnuchin.

“Our pathetic, slow moving Federal Reserve, headed by Jay Powell, who raised rates too fast and lowered too late, should get our Fed Rate down to the levels of our competitor nations,” Trump wrote on Twitter on Tuesday. “They now have as much as a two point advantage, with even bigger currency help. Also, stimulate!”

Wall Street entered a bear market on Wednesday as stocks plummeted over coronavirus fears, supply-shocks stemming largely from China’s quarantine efforts, and an oil price war between Russia and OPEC nations.

Source - National Review

About the author

Philip Scott

Head of Equities, Director

Philip has worked as a Private Client Stockbroker for nearly 20 years, commencing his career in Operations with Rensburg Sheppards (now part of Investec plc) before spending 9 years with Killik & Co advising on and directly managing portfolios. He joined SI Capital in 2006 to head up the Private Client Advisory desk.

Philip is a regular contributor to local media commenting on stock market dynamics and is a Chartered Member of the Chartered Institute for Securities & Investment (MCSI). His RDR qualification gained special recognitionfrom the CISI for achieving the highest combined pass mark in the country for the Investment Advice Diploma in 2012.

“At SI Capital I enjoy being part of a talented team who collectively share the same desire to provide excellence in service.  My focus is to ensure that each client receives effective and optimal management of their assets.”

Philip lives locally, is married with 2 daughters and is an avid sports fan (if now predominantly from the sidelines).  His other interests include music and film.

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