The Federal Reserve's pledged support for exchange-traded funds may not end up costing the central bank much, but will still have the desired effect of keeping the credit market afloat.
) both hit 11-year lows in March before the Fed’s announcement, although they have rallied 16.8% and 21.1%, respectively, since.
Fed Chair Jay Powell on Wednesday acknowledged the central bank’s actions have already helped, saying that markets had loosened up and started functioning after the announcement, meaning that ultimately the Fed may not be needed. “If they buy aggressively right now they would no longer merely be guarding liquidity but rather chasing spreads tighter. That’s beyond what their mandate should be,” said Tom Graff, head of fixed income at Brown Advisory.
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