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Treasury Secretary Steven Mnuchin on Thursday said he had asked the Federal Reserve to return unused coronavirus stimulus money.

He as essentially rejected the central bank’s request for a 90-day extension for four emergency lending programs.

All emergency programs created by the Cares Act, the stimulus President Donald Trump signed earlier this year, will expire by Dec. 31, Mnuchin said in a statement.

The Federal Reserve has responded:

“The Federal Reserve would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy.”

Meanwhile, the move has been supported by Senator Toomey:

Fed Chairman Jerome Powell had requested an extension of the Commercial Paper Funding Facility, the Money Market Liquidity Facility, Primary Dealer Credit Facility, and the Paycheck Protection Program Liquidity Facility.

Market implications

The markets will weigh the prospects of a spreading virus, lockdowns and how Congress is going to manage the risks to the economy with fiscal stimulus.

The uncertainty in markets will hamstring risk assets. 

S&P 500 futures drop as Mnuchin pulls plug on Fed emergency lending programmes

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