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Fed's Rosengren: US economy to suffer a 'significant shock' with higher unemployment

"The goal of the new money market fund facility is to provide liquidity to prime money market funds that were experiencing some runoffs," Boston Federal Reserve Bank President Eric Rosengren explained on Thursday.

Key takeaways

"Money market liquidity facility is designed to give people confidence that the funds they view as liquid and secure are liquid and secure."

"The Fed can’t do much about the pandemic but can take steps to mitigate financial spillovers."

"Government securities money market funds are actually seeing funds flow in."

"Fed will be protected by collateral and $10 billion backstop from the Treasury."

"US economy will suffer a significant shock' with higher unemployment."

"Fully confident that over time financial markets will be resilient and the US economy will come back."

Market reaction

These comments were largely ignored by the market participants and the US Dollar Index was last seen adding 1.48% on the day at 120.40.

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