The Fed will buy Treasuries and agency mortgage-backed securities "in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy", and will also buy agency commercial mortgage-backed securities (MBS), according to a statement.
The latest move is seen as an attempt by the Fed to prevent the type of financial shock seen in the global financial crisis of 2008.
Hundreds of thousands of people have already filed for unemployment insurance in California alone, the state's governor said at the weekend, and many analysts are projecting declines in economic output next quarter that are far worse than the steepest drop during the Great Recession.
"What they did, more than just starting up some new programs, was to drive home they are willing to do whatever it takes", said Tom Porcelli, chief US economist at RBC Capital Markets.
But analysts worry it is going to do little to offset the near-term economic harm accomplished by mass lockdowns and layoffs.
A Reuters poll of economists estimated initial jobless claims rose an astounding 1 million last week, and some believe the number could be higher.
Goldman Sachs warned the U.S. economic growth could contract by 24 per cent in the second quarter, two-and-a-half times as large as the previous postwar record.
A variety of flash surveys on European and USA manufacturing for March are due in a while Tuesday and are anticipated to indicate deep declines into recessionary territory.
Surveys from Japan showed its services sector shrank at the fastest pace on record in March and factory activity at the quickest in about a decade. "It's their we'll do whatever it takes moment which should be a sign to financial markets and investors that the Fed will provide any and all liquidity necessary to support the economy through this period".
The US dollar eased just a touch on the yen to 110.90 after hitting a one-month top at 111.59 on Monday, while the euro inched up to US$1.0754 from a three-year trough of US$1.0635.
The dollar index against a basket of peers was last 101.79, down 0.7% on the day.
Commodity and emerging market currencies that suffered most during the recent asset rout also benefited from the Fed's steadying hand.
The dollar index stood at 102.120, off a three-year peak of 102.99.
Gold surged within the wake of the Fed's promise of but extra low cost cash, and was final at $1,564.51 per ounce XAU= having rallied from a low of $1,484.65 on Monday. Brent crude LCOc1 firmed 53 cents to $27.56.