The US Federal Reserve has warned that the country's economy faces major trouble as a result of the coronavirus outbreak and vowed to take measures to minimise its influence.
"It has become clear that our economy will face severe disruptions", the Federal Reserve said in its statement.
Among the measures that the US financial body has begun to utilise to limit the pandemic's impact on the economy are backstopping of credits for households, small businesses, and major employers. The latter will be supported via the government lending them money by buying companies' bonds.
"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 official statement elaborated.
The Federal Reserve also promised to unveil a direct lending programme for small and medium-sized American businesses, which are expected to be hardest hit by the outbreak. In addition, the financial body will help students with their education loans.
The new government aid package for businesses and households comes after previous measures failed to stop the ongoing downslide on the American stock market. The Dow Jones Industrial Average index has lost 1,114 points or 5.03% since last Monday, down to a level of 19,174, which was last seen in December 2016. At the same time, the NASDAQ Composite lost 3.79%, or 271 points, falling to a level of 6,879 – last witnessed in January 2019.
Previously, analysts at JP Morgan Chase and Goldman Sachs independently predicted a major drop in the US' GDP in the second quarter, and in 2020 overall, due to the coronavirus outbreak's impact on businesses operations. In turn, Bank of America forecast hundreds of thousands of layoffs and firings in the coming weeks, as many firms have had to halt their operations due to the lack of clients, who are choosing to stay home amid the pandemic.