July 8, 2020 / 2:02 PM / a month ago

NY Fed's Singh says emergency facilities helped markets despite low usage

July 8 (Reuters) - The Federal Reserve’s emergency lending facilities helped stabilize markets after anxiety over the coronavirus sparked volatility in March, and the central bank stands ready to adjust its approach if necessary, a senior official at the New York Fed said on Wednesday.

While some of the programs the Fed set up to help keep credit flowing to households and businesses had low usage, the backstops still helped to improve market functioning, said Daleep Singh, head of the markets group at the New York Fed. A high level of uncertainty over the outlook means that the central bank needs to stay vigilant, he said in prepared remarks.

“We need to be watchful of banking sector resilience in the face of potential waves of nonperforming loans and bankruptcies that could challenge asset quality,” Singh said. “All of this is to remind us of what we already know: there remains tremendous uncertainty about the path ahead, and so we must stay humble in the face of ongoing risks and resolute in our commitment to adapt as needed.” (Reporting by Jonnelle Marte Editing by Chizu Nomiyama)

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