Like patients around the world battling the disease itself, the USA economy is on life support, with some forecasters projecting a 14 percent contraction in the April-June quarter while the global economy could shrink 1.5 percent this year. It also created the Term Asset-Backed Securities Loan Facility (TALF), which will support credit flow to consumers and businesses.
In an eerie announcement, Federal Reserve Bank of St. Louis President James Bullard predicted on Sunday that the United States might see its unemployment rate reach 30% in the second quarter of 2020, the highest since the Great Depression, due to shutdowns now underway as part of the country's effort to combat the coronavirus pandemic that has infected over 30,000 Americans.
"Safe to say, the chaos of the last few weeks is going nowhere and the way this week has started, it could feasibly be the most remarkable week of the lot".
"Everything is on the table" regarding additional lending programs, Bullard said Sunday in St. Louis. "This isn't corporate welfare".
Mnuchin said the Fed's measures would provide $4 trillion in needed liquidity into the United States economy.
However, just hours before the USA stock market opened, the Federal Reserve announced that it will be buying an unlimited amount of Treasury bonds and mortgage-backed securities to tackle the "severe disruptions" caused by the novel coronavirus.
The Fed will buy U.S. Treasuries and mortgage-backed securities to provide emergency injections of cash into banks.
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.
In coming days, the Fed said, it will launch a program directly aimed at Main Street - to support loans to small businesses.
"While great uncertainty remains, it has become clear that our economy will face severe disruptions", the Fed said in a news release. "Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate", the statement said.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, offered an equally dire warning: "The near-term threat to the economy is existential".
Other measures announced Monday include $300 billion to provide liquidity for the credit market, with the U.S. Treasury providing another $30 billion; two new facilities to support credit to large employers, including liquidity for outstanding corporate bonds; and support for consumer credit by allowing the issuance of securities backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration and certain other assets.