The Fed just extended its pandemic lending programs through December

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WASHINGTON, DC – MARCH 03: Federal Reserve Chair Jerome H. Powell announces a half percentage point interest rate cut during a speech on March 3, 2020 in Washington, DC. (Photo by Mark Makela/Getty Images)

 The Federal Reserve announced Tuesday its lending programs will be extended until the end of the year. It’s a sign the central bank doesn’t think the US economy has weathered the pandemic storm yet.

The programs, which include the main street lending facility that lends to small and medium-sized businesses, were previously meant to expire at the end of September.

“The three-month extension will … provide certainty that the facilities will continue to be available to help the economy recover,” the Fed said, calling the programs “a critical backstop.”

Fed Chairman Jerome Powell has said time and time again that more action from both the central bank and Congress will be necessary to get the economy through this crisis.

Economic data has improved since the worst of the lockdown’s effects, and the stock market has rebounded to near record highs. Still, many economists believe the recovery is fragile.

To that point, more data is on tap in a busy week for key economic events: The Fed’s two-day monetary policy meeting is getting underway Tuesday, culminating in its monetary policy update at 2pm ET Wednesday, followed by a press conference with Chairman Jerome Powell at 2:30pm ET.

Thursday brings the first look at second-quarter gross domestic product, the broadest measure of the economy, and it’s expected to be ugly. Economists predict an annualized drop of more than 34% between April and June, which included the worst days of the pandemic lockdown.

Earlier this week, Senate Republicans proposed another $1 trillion pandemic relief package. The proposal includes cutting the federal boost to regular unemployment benefits to $200 per week, from $600.

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