BIS paper explores Fed’s ‘whatever it takes’ moment

Covid facility had most of its impact without the Fed actually buying any bonds, authors find

US Federal Reserve building

The Federal Reserve’s interventions in the corporate bond market during Covid-19 helped restore stability before any bond-buying actually took place, a new paper finds.

The Bank for International Settlements’ working paper examines the Fed’s Secondary Market Corporate Credit Facility (SMCCF), which offered to buy the bonds of eligible companies. The aim was to reduce market dysfunction during the ‘dash for cash’ in March 2020, reversing an inversion of the yield curve.

Authors Simon Gilchrist

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