The Federal Reserve will backstop credit markets through 2020, and is expected to pledge continued economic help at its Wednesday meeting.
The Federal Reserve extended its emergency lending programs on Tuesday through the end of 2020, a three-month addition that, while not surprising, signaled how lasting the economic damage from the coronavirus is proving.
The decision came as officials gathered remotely for a two-day policy meeting that will conclude on Wednesday, when the Fed releases a statement at 2 p.m.
That meeting is likely to yield little action — rates are already at near-zero and are almost certain to stay there for an extended period — but it could provide a fresh read on how Fed officials are thinking about the economic outlook, and hints about their plans for the future.
The chair, Jerome H. Powell, who will hold a remote news conference at 2:30 p.m., is sure to field questions on the newly extended emergency lending programs, which have been introduced to try to keep markets functioning and credit flowing.
The Fed took unprecedented actions in March and April to provide a first line of defense for the economy as coronavirus cases swept the nation and shut down entire business sectors. Most of the nine programs were set to expire on or around the end of September, evidence that officials expected that normal conditions might return by fall.
That optimism has been upended by a surge in new infections, which has continued to depress economic activity. While state and local economies have reopened, many have had to roll back or delay their plans, and experts warn that the situation could take a turn for the worse if the virus takes hold more deeply.
Unemployment remains in double digits and more than a million new people have continued to file for state jobless insurance each week. The path forward for government relief remains uncertain as Congress haggles over how to extend federal aid for the pandemic’s many economic victims, including an extra $600 per week in unemployment benefits that expires on July 31.
That is why the Fed’s emergency lending programs could continue to prove useful. The mere announcement of the programs helped smooth markets and many have been lightly used, but officials have warned that conditions could worsen again if a second wave of the virus strikes.
