U.S. Fed announces asset purchases with no limit

The U.S. Federal Reserve (Fed) announced on Monday a plan to purchase U.S. treasuries and agency mortgage-backed securities with no limit to help markets function more efficiently amid coronavirus uncertainty.

"The Federal Reserve will continue to purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions," the Fed said in a statement before the stock market opened, putting no numerical cap on its asset purchase program.

Earlier this month, the Fed pledged to buy at least 500 billion U.S. dollars in U.S. treasuries and at least 200 billion dollars in agency mortgage-backed securities over the coming months.

The Fed's latest move signaled that the central bank is prepared to act as much as necessary to help the U.S. economy weather the coronavirus outbreak.

"The coronavirus pandemic is causing tremendous hardship across the United States and around the world. Our nation's first priority is to care for those afflicted and to limit the further spread of the virus," the Fed said, adding that the U.S. economy will face "severe disruptions."

"Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate," said the central bank.

U.S. business news channel CNBC called Monday's announcement "the most aggressive market intervention the Fed has made to date."

On March 15, the central bank trimmed its benchmark interest rate by a full percentage point to near zero.

The Fed earlier said that it would establish a Commercial Paper Funding Facility to support the flow of credit to households and businesses amid coronavirus uncertainty.

On Friday, the Fed said it would enhance U.S. dollar liquidity swap line arrangements with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank to ease strains in global dollar funding markets.

The Fed earlier said that it expanded its program backing money market mutual funds to "enhance the liquidity and functioning of crucial state and municipal money markets."

Professor of the University of Oregon and a long-time Fed watcher Tim Duy wrote in a blog post on Sunday that "Chair Jerome Powell and his colleagues brought out tools over a two-week span that took years to develop during the last crisis."

"This week the data will start to catch up to reality and it's going to be ugly," Duy said. "I have yet to see reason to expect financial markets will stabilize anytime soon."

U.S. stocks opened lower on Monday. Shortly after the opening, the Dow Jones Industrial Average dipped 348.26 points, or 1.82 percent, to 18,825.72 The S&P 500 dropped 33.03 points, or 1.43 percent, to 2,271.89. The Nasdaq Composite Index decreased 21.45 points, or 0.31 percent, to 6,858.06.

Wall Street finished the past week with massive losses as investors grappled with fears over potential economic damage by the coronavirus.

Last week, the Dow shed 17.3 percent, the S&P 500 fell 14.98 percent and the Nasdaq lost 12.64 percent. The major averages saw their worst weekly performance since the financial crisis in 2008.