June 2021

The COVID-19 Crisis and the Federal Reserve's Policy Response

Richard H. Clarida, Burcu Duygan-Bump, and Chiara Scotti

Abstract:

The COVID-19 pandemic and the mitigation efforts put in place to contain it delivered the most severe blow to the U.S. economy since the Great Depression. In this paper, we argue that the Federal Reserve acted decisively and with dispatch to deploy all the tools in its conventional kit and to design, develop, and launch within weeks a series of innovative facilities to support the flow of credit to households and businesses. These measures, taken together, provided crucial support to the economy in 2020 and are continuing to contribute to what is expected to be a robust economic recovery in 2021.

Keywords: monetary policy, forward guidance, asset purchases, section 13(3) facilities

DOI: https://doi.org/10.17016/FEDS.2021.035

PDF: Full Paper

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Last Update: June 03, 2021