May 4, 2020 / 6:14 PM / a month ago

New York Fed says outlook for Fed balance sheet is 'highly uncertain' due to coronavirus

FILE PHOTO: People walk wearing masks outside The Federal Reserve Bank of New York in New York City, U.S., March 18, 2020. REUTERS/Lucas Jackson/File Photo

NEW YORK (Reuters) - The outlook for the Federal Reserve’s balance sheet is “highly uncertain” given the economic deterioration caused by the coronavirus pandemic, the New York Fed said in a report released on Monday.

Prior to the pandemic, the New York Fed’s projections had the balance sheet rising to $6.3 trillion (£5.07 trillion) under a baseline scenario. However, the Fed’s balance sheet last month grew to $6.7 trillion as the central bank bought assets to stabilize financial markets and cushion the economy from being devastated by the pandemic.

The Fed has introduced a slew of emergency lending facilities since March and conducted open-ended bond purchases to help keep credit flowing to households and businesses. As a result of those programs, the balance sheet could swell to $10 trillion this year, according to economists polled by Reuters.

Reporting by Jonnelle Marte in New York and Ann Saphir in Berkeley, Calif.; Editing by Chizu Nomiyama and Matthew Lewis

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