Having announced its most aggressive intervention to date to help contain the fallout from the coronavirus outbreak last week, the US Federal Reserve is now forecasted to expand its balance sheet by $4 to $5 trillion in this easing cycle, as noted by popular analyst Jeroen Blokland, Portfolio Manager for the Robeco Multi-Asset funds, Robeco ONE and Robeco Pension Return Portfolio.
The central bank instituted an open-ended form of asset purchases last Monday to buy Treasury and Mortgage-Backed Securities in the amounts needed to ensure the smooth functioning of the markets and expanded its capacity to support the municipal bond and money markets.
The Fed's balance sheet has already expanded rapidly over the last few days and stood at an eye-watering $5.3 trillion on Wednesday.
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