The U.S. Federal Reserve and the Bank of England ramped up their emergency responses to the world's escalating coronavirus recession on Thursday as they pushed deeper into territory once considered fraught with risk for central bankers.
WASHINGTON/LONDON - The U.S. Federal Reserve and the Bank of England ramped up their emergency responses to the world’s escalating coronavirus recession on Thursday as they pushed deeper into territory once considered fraught with risk for central bankers.
With central banks around the world trying to cocoon their their shuttered economies while the shutdowns last, Fed chief Jerome Powell dismissed suggestions they risked creating an inflation surge or distorting the way companies do business. In a reminder of the scale of the hit to the U.S. economy, data showed 16.8 million Americans filed for unemployment benefits in the last three weeks.
“It will be interesting to see how the Fed reacts to losses should the coming default cycle take a significant toll on its holdings,” he said. In 2008, the government ran its BoE overdraft up to nearly 20 billion pounds. It may have to go further this time if bond investors balk at a possible doubling of its debt issuance to around 285 billion pounds, according to some forecasts.
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