Special Report: Federal Reserve

Federal Reserve Delivers Aggressive Monetary Policy Early in Coronavirus Outbreak

March, 2020

Federal Reserve pulls all the levers to bridge U.S. economy through a global pandemic. The Federal Open Market Committee (FOMC) unleashed its broad and sizable arsenal this week, highlighting the impact COVID-19 will have on the national economy and the central bank’s willingness to be accommodative early in the cycle to dampen an economic downturn. Nonetheless, an increase in unemployment claims and job cuts is unavoidable as a significant wave of retail, hospitality, travel and other parts of the consumer-based economy are shuttered.

Report Highlights:

• In a decisive move, the Federal Reserve dropped the federal funds rate to between 0 and 0.25 percent

• Fed action includes the creation of three new facilities, reactivating three others, and significantly expanding the type of qualifying bonds the Fed can add to its balance sheet

• Although Treasuries are near an all-time low, significant cap rate compression is not anticipated considering increased uncertainty