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The Fed has taken an extraordinary amount of actions in response to the #COVID19 shock. Their response has been far superior to the #GFC. Since March 9, the Fed has expanded its balance sheet in a staggering 70%. 1/
A big chunk of the #COVID19 intervention came in form of purchases of Treasury securities and MBS. These would be undertaken at the unprecedented rate of up to $125 bn/day during the week of March 23. Since the start of this QE the Fed has acquired around $1.6 tn of treasuries 2/
The Fed also acquired MBS. Since the start of the intervention the Fed has increased its MBS position in $0.5 tn. One difference from previous QE: the Fed is purchasing securities of different maturities, so the effect will not be concentrated on long-term rates. 3/
Before the #GFC the Fed used repos to target the fed funds rate, but depreciated the policy due to QE inflating the balance sheet. However, on March 12 the Fed announced it would offer a 3-month repo of $500 bn and a 1-month repo of another $500 bn on a weekly basis 4/
Probably one of the most interesting policies was the expansion of swap lines with foreign CBs. On March 31, the Fed created the Foreign and International Monetary Authorities Repo Facility to allow foreign central banks to temporarily swap Treasury Securities for U.S. dollars 5/
On March 17, the Fed revived the commercial paper funding facility to purchase commercial paper, which is an important source of short-term funding for financial firms, non-financial firms, and ABS 6/
Overall this means that the Fed has increased its balance sheet in an unprecedented way, greater than any of the previous QE experiences 7/7
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