The US Federal Reserve said yesterday it was extending the life of three emergency lending programmes aimed at thawing the credit markets.
The move comes a day after Ben Bernanke, the Fed chairman, said the economy remained under “considerable stress” and made clear that policymakers would use unconventional central banking tools in addition to interest rate cuts to support it, such as buying long-term government bonds.
The lending facilities provide loans to bond dealers, lend to banks buying assetbacked commercial paper from mutual funds, and auction loans of Treasury securities. They will now last a further three months, until the end of April, and bring the facilities into line with other central bank initiatives to combat the credit crisis.
However, the announcement only added to growing fears about the US economy, which has already been in recession for nearly a year, according to the National Bureau of Economic Research, the leading independent economic authority.