The U.S. central bank, the Federal Reserve, officially announced on the 3rd (local time) that it would begin tapering its asset purchases.
After the outbreak of the novel coronavirus infection (COVID-19) in March last year, the Fed, which lowered the base rate to ‘zero’ and started unlimited quantitative easing, took the first ultra-accommodative monetary policy in 20 months in consideration of the faster-than-expected economic recovery and soaring prices. announced the amendment.
The following is a diary of major US monetary policies after the COVID-19 pandemic.
▲ March 3, 2020 = The Fed announces a 0.5 percentage point cut in interest rates from 1.00 to 1.25%. The decision was unanimous via videoconference on the night of the 2nd, ahead of the Federal Open Market Committee’s (FOMC) regular meeting scheduled for March 18th.
▲ March 15, 2020 = The Federal Reserve cuts the base rate by 1 percentage point to 0.00-0.25%, and implements a ‘zero interest rate’. Quantitative easing began by deciding to purchase US$700 billion of US Treasury bonds and mortgage-backed securities (MBS).
▲ March 17, 2020 = The Federal Reserve decides to establish the Commercial Paper Purchasing Organization (CPFF). The purpose is to provide liquidity to companies by purchasing commercial paper (CP).
▲ March 17, 2020 = The Treasury Department approved the introduction of the ‘Primary Dealer Credit Center’ (PDCF) by the Federal Reserve. A program that provides loans for up to 90 days at low interest rates to 24 large financial institutions such as major investment banks and securities companies.
▲ March 18, 2020 = The Fed introduces the ‘Money Market Mutual Fund Liquidity Support Window’ (MMLF). As demand for redemption of money market mutual funds (MMMF) surged, the Fed decided to lend money to banks that purchase assets from MMMF.
▲ March 23, 2020 = The Fed declares unlimited quantitative easing, saying it will buy “as much as necessary” of Treasury bonds and MBS. The ‘Primary Market Corporate Credit Organization’ (PMCCF), ‘Secondary Market Corporate Credit Organization’ (SMCCF), and ‘Asset-backed Securities Loan Facility’ (TALF) were established to support businesses and households.
▲ April 9, 2020 = The Federal Reserve announced plans to inject up to $2.3 trillion of liquidity. The contents of emergency organizations such as ‘Main Street New Loan Facility’ (MSNLF), ‘Main Street Expansion Loan Facility’ (MSELF) and ‘Payroll Protection Program’ (PPP) will be operated to stabilize the corporate bond market and provide consumer finance support.
▲ August 27, 2020 = The Fed introduces an average price stabilization target system. By modifying the inflation target to a ‘long-term average of 2%’, the intention is not to raise the interest rate even if it exceeds 2% for a certain period of time.
▲ May 19, 2021 = Confirmed that the possibility of tapering discussion was first mentioned at the April FOMC regular meeting. Minutes released today stated that “a few attendees expressed their opinion that it might be appropriate to start a discussion on a plan to adjust the rate of asset purchases sometime during future meetings.”
▲ August 18, 2021 = It was confirmed that the possibility of tapering within the year was suggested at the FOMC regular meeting in July. Minutes released on the same day stated that “most of the attendees mentioned that it may be appropriate to start slowing down the pace of asset purchases this year.”
▲ August 27, 2021 = Federal Reserve Chairman Jerome Powell speaks at the annual Jackson Hole Symposium in support of tapering within the year.
▲ October 13, 2021 = The fact that the FOMC regular meeting in September predicted the start of tapering in mid-November or mid-December was confirmed through the minutes released today.
▲ November 3, 2021 = Announcement of the start of tapering from this month after the November FOMC regular meeting
/yunhap news
