US Fed dials back recovery hopes, extends lending offers through year-end

The US Federal Reserve said on Tuesday it will extend several of its lending facilities through the year-end as the central bank continues to dial back expectations on how quickly the US economy will recover from the novel coronavirus pandemic.

The extensions apply to those facilities that were due to expire on or around September 30, the Fed said in a statement.

"The three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover," the Fed said.

Hopes for a quick recovery have been dashed as the United States continues to struggle to contain the virus. A resurgence in new cases has forced some authorities in the hard-hit South and West regions to close businesses again or halt reopenings.

The US central bank said the extensions apply to the Primary Dealer Credit Facility, Money Market Mutual Fund Liquidity Facility, Primary Market Corporate Credit Facility, Secondary Market Corporate Credit Facility, Term Asset-Backed Securities Loan Facility, Paycheck Protection Program Liquidity Facility, and Main Street Lending Program.

All are designed to keep credit flowing to businesses and households and stave off long-term harm to the economy. Tens of millions are still out of work and fears are growing that the situation could worsen again as relief programs reach their initially scheduled end.

Expanded unemployment benefits for millions of workers are set to expire this week. Republicans and Democrats in Congress are still negotiating a new aid package to extend them, with another round of direct payments to Americans and more loans to help small businesses also being considered.

Two other Fed programs have a longer timeline. The Municipal Liquidity Facility is set to expire on Dec. 31, and the Commercial Paper Funding Facility on March 17, 2021.