'A buying spree of epic proportions': How the Federal Reserve bucked precedent and forever changed its role in the US economy | Markets Insider

'A buying spree of epic proportions': How the Federal Reserve bucked precedent and forever changed its role in the US economyThe Federal Reserve's rapid balance sheet expansion and move into corporate bond purchases has seen the central bank trade its independence from markets for a"whatever it takes" attitude.

Then, on March 20, the monetary authority's role changed. The Fed announced it would begin buying corporate bonds for the first time in its 107-year history, offering aid for cash-strapped businesses large and small. That facility marked a paradigm shift to the central bank's code and separated the Fed from its originally intended role in the US economy.

"The use of high-yield purchases is designed explicitly to say, 'look, if you were an investment-grade company before March 223 and you got downgraded because of COVID, that shouldn't have happened,'" Lauren Goodwin, economist at New York Life Investments, said in an interview. Even if market valuations normalize and account for the Fed's policy, closing its facilities in the wake of the economic downturn will drive violent price swings all over again, Goodwin warned.

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