Fed officials have in the past said that the central bank’s role as a supervisor and regulator gives it access to critical information that plays a part in setting monetary policy. The recent slashing of short-term interest rates and barrage of actions designed to get ample liquidity where it is needed are directly related to monetary policy. However, its decisions as a regulator and supervisor can impact the functioning of the banks and other financial institutions. The March 24 announcement that it was adjusting its supervisory approach “in light of the coronavirus” is another indication that the Fed is monitoring events and impacts closely, and that all we can add to the list of tools it will use to address the crisis are not limited to conventional and unconventional monetary policy. Details were provided in an attached statement.
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