US Federal Reserve Extends Emergency Lending Programs to Dec. 31 Despite Lower Than Anticipated Uptake
As the US economy continues to struggle amid the coronavirus pandemic, the Federal Reserve has decided to extend its emergency lending programs by an additional three months, given the current anticipation of an increase in demand over the next several months.
US Treasury Secretary Steven Mnuchin recently stated that he has approved three-month extensions on several emergency lending programs offered by the US Federal Reserve, which were originally slated for expiry on September 30. Now, the credit facilities, many of which encompass small business lending and the purchase of junk bonds, have been extended until December 30.
Although an extension on many of the programs has been approved, the takeup on a lot of the programs has been weak. Back in April when the Fed announced it will be offering emergency lending programs, it stated that up to $2.3 trillion in funding would be made available; now several months in into the programs however, only about $110 billion in loans has been issued. This is partly due to traditional lenders opting for short term markets in lieu of the Fed’s liquidity.
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