WASHINGTON: The Federal Reserve will extend seven of its emergency lending programmes through the end of the year, an acknowledgement that they may be necessary for longer than was first thought as the nation struggles to control the coronavirus.

The Fed announced the extension of the programmes, past their original expiration dates of Sept 30, at a time when a spike in confirmed virus cases has shown signs of slowing the economy.

The extension will facilitate planning ... and provide certainty that the facilities will continue to be available to help the economy recover from the Covid-19 pandemic, the Fed said on Tuesday.

It applies to several programmes that lend to Wall Street banks and other financial institutions to ensure the flow of credit to businesses and households as well as to the Fed’s corporate bond purchase schemes. The central bank has also extended its Main Street Lending Programme, which is intended to support mid-sized companies but has generated only a small amount of borrowing so far.

Two of the Fed’s emergency lending programmes, one that buys state and local bonds and another that purchases short-term corporate debt, weren’t included in the anno­uncement. Its Municipal Liquidity Facility is already scheduled to last through the end of the year, and the Commercial Paper Funding Facility will expire in March 2021.

Published in Dawn, July 29th, 2020