Fed QE reaction: 'Panic will continue until fiscal package announced'

US central bank has gone 'nuclear'

Industry commentators have described the US Federal Reserve's decision to buy up boundless government bonds and mortgage-backed securities (MBS) as "unprecedented" and "encouraging", but doubts remain as to how effective the latest measures will be.

On Monday (23 March), the Fed announced it would purchase unlimited US Treasuries and mortgage-backed securities as well as buying corporate debt for the first time in a bid to support businesses and financial markets during the coronavirus pandemic; further intervention than was taken by the Fed during the 2008 financial crisis. Kevin Doran, chief investment officer at AJ Bell, dubbed the move "trench warfare in a world where the enemy has gone airborne", adding that the focus should be on fiscal policy. "After the ECB and Bank of England rolled out their quantitative easing cannons ...