Central Banks

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The Federal Reserve completed its annual stress test on Thursday for 2020 and additional sensitivity analyses that the Board conducted in light of the coronavirus event. The Fed capped bank dividend payments and suspended share-buybacks for the third quarter.

The Federal Reserve kept rates unchanged, kept QE infinity open with TALF for open-ended Treasuries, MBS and corporate bonds in amounts needed. Fed will continue to buy paper at current pace of $120B/month of Treasuries and MBS combined. Compared that to $40B/month in QE3.

Germany's Angela Merkel and France's Emmanuel Macron have propesed a €500 billion European coronavirus reconstruction plan. The aim is the recovery fund that should give grants, not loans to EU member states.

The Federal Reserve released it's twice–yearly report on financial hazards in it's 2020 financial stability report warning that the coronavirus (COVID-19) pandemic has caused tremendous human and economic hard-ship across the United States and around the world. They warned on assets if the pandemic worsens.

The Federal Reserve kept rates unchanged, kept QE infinity open with TALF for open-ended Treasuries, MBS and corporate bonds in amounts needed. Fed will continue to assess Cornoavirus damages to the economy.

The ECB said it is taking steps to mitigate the impact of possible ratings downgrades on collateral availability and will grandfather until September 2021 eligibility of marketable assets in euro system credit operations. The market has been jittery about the Italian credit situation.

The Reserve Bank of Australia left interest rates unchanged on Tuesday to 0.25%  The RBA had performed a second 25bp cut in March to a historic low. RBA to buy govt bonds in secondary market across yield curve.

The Bank of Canada cut its key lending rate to 0.25 percent on Friday in an unexpected move. This is the third 50bp cut in just 2 weeks in response to Coronavirus panic. BOC also launched first QE and a commercial paper program.

The Swiss National Bank in response to the Coronavirus Pandemic set up a refinancing facility and deactivated the counter-cyclical buffer for Swiss Banks Tuesday. The SNB announced new packages to attempt to protect the Swiss economy.

The Federal Reserve launched QE infinity Monday, establishing TALF for open-ended Treasuries, MBS and corporate bonds in amounts needed. Fed followed up last week's surprise rate slash and expanded QE as Cornoavirus damages the economy.

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