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COVID-19 Is Making the Economy Sick, Too



COVID-19 is Making the Economy Sick, Too

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COVID-19 Is Making the Economy Sick, Too

Here is what the Federal Reserve is doing and why

While healthcare experts focus on the COVID-19 pandemic and work to keep people healthy, the Federal Reserve is working to keep the nation’s economy healthy. Toward that end, in March 2020, the Fed began taking a number of steps to support the economy.

What is the Fed doing and why?

While the Fed doesn’t have the tools to directly affect unemployment or loss of business, by reducing interest rates and supporting the functioning of financial markets, the Fed seeks to keep credit (such as loans) flowing to households and businesses, thereby helping to cushion the economic impacts of the virus.

The Fed supervises banks. What’s it urging them to do?

US banks are strong, and the Fed and other federal banking agencies have encouraged banks to use that strength to support people and businesses. Specifically, the Fed has encouraged banks to use financial cushions built up during the past decade to provide loans and work with their borrowers. In addition, the Fed is encouraging banks to borrow from the Fed to help banks meet borrowers’ needs.

Moving forward

The circumstances surrounding the COVID-19 outbreak continue to evolve rapidly. While the primary responses to COVID-19 will come from others, the Fed will continue to closely monitor market conditions and is prepared to adjust its plans as appropriate.

The Fed’s actions to support the US economy are updated in real time here.


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Learn what the Federal Reserve is doing and why as it works to keep the nation’s economy healthy during the COVID-19 pandemic.

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    The Federal Reserve Bank of Cleveland is sponsoring the Annual Conference on Real-Time Data Analysis, Methods, and Applications in Macroeconomics and Finance to be held in Cleveland, Ohio, at the Cleveland Reserve Bank on Thursday and Friday, October 6–7, 2022.

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