- G-7 central banks bought nearly $1.4 trillion of financial assets in March, Bloomberg reported Tuesday, roughly five times the last monthly record notched in April 2009.
- The Federal Reserve led the group with $1.1 trillion in purchases. Central banks of Canada, New Zealand, and Australia started their first quantitative easing programs over the period.
- The US authority hasn’t slowed its buying pace since, taking in $41 billion in assets each day over the week ended April 15.
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Central banks for G-7 nations spent a record sum to aid market functioning as the coronavirus pummeled financial sectors through March.
The world’s leading monetary authorities bought nearly $1.4 trillion of financial assets over the period, Bloomberg reported Tuesday, pushing their balance sheets to record sizes to pad against economic collapse. The European Central Bank, Bank of Japan, and Bank of England all joined in implementing quantitative easing programs.
Central banks of Canada, New Zealand, and Australia kicked off their first such policies over the month as the coronavirus threat turned global.
Total central bank purchases suggest the pandemic-fueled recession will require far more stimulus to overcome than the financial crisis. March programs across the G-7 were roughly five times the size of the last monthly record set in April 2009, according to Bloomberg Economics.
The Federal Reserve dwarfed its peers, buying more than $1.1 trillion after announcing unlimited purchase plans for US Treasuries and corporate debt. The bank's balance sheet swelled above $5 trillion by the end of March for the first time ever.
The US authority's streak hasn't slowed in the weeks since. The Fed bought up $41 billion in assets every day in the week ended April 15, according to Bloomberg.
What began as typical Fed intervention has since ballooned to the bank's first foray into buying corporate debt across a spectrum of ratings. The central bank first announced a funding pool for investment-grade debt to help keep companies afloat amid the virus shutdown. The Fed expanded its lending program to include junk-bond ETFs on April 9, propping up the riskier debt market and lifting investor sentiment.
While some have criticized the Fed for moving into the high-yield sector, Loretta Mester, president of the Federal Reserve Bank of Cleveland, saw it as a necessary part of calming the broad market. In a Friday interview with Bloomberg TV, the bank chief said the Fed is too worried about the threat to financial markets to pay much mind to those who may see the purchases as endorsing risk-taking.
"This is a hugely and negatively impactful shock, and we have to do all we can to make sure we're not doing permanent damage to the underlying fundamentals of the economy," she said.
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