Fed to try to ease flow of credit with new lending facility


Last updated 3/21/2020 at 3:32pm

Federal Reserve Chair Jerome Powell speaks during a news conference, Tuesday, March 3, to discuss an announcement from the Federal Open Market Committee in Washington. In a surprise move, the Federal Reserve cut its benchmark interest rate by a sizable half-percentage point in an effort to support the economy in the face of the spreading coronavirus. Chairman Jerome Powell notes that the coronavirus "poses evolving risks to economic activity." AP photo/Jacquelyn Martin photo

Christopher Rugaber

AP Economics Writer

In its latest emergency action, the Federal Reserve is establishing a lending facility to try to ease the flow of short-term credit to banks and businesses as the economy grinds to a halt from the viral outbreak.

The Fed announced Tuesday, March 17, that it's reviving a program it first used during the 2008 financial crisis to unclog a short-term lending market for what is known as "commercial paper." Large businesses issue commercial paper to raise cash to meet payrolls and cover other short-term costs.

"An improved commercial paper market will e...

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