From Yahoo Finance: 2025-04-24 06:03:00

Market participants are concerned about the Fed’s response to asset price spikes due to Trump’s policy shifts. The Fed’s toolkit could be used to stabilize markets if needed, including a repo facility and Treasury buyback program. Fed officials are not currently planning intervention despite market volatility.

Experts suggest the Fed could use its balance sheet as a last resort to stabilize markets if needed, despite potential challenges. Bond purchases could signal easing monetary policy amid concerns of inflation. Other economists propose a facility to buy and sell bonds to target hedge fund trade breakdowns.

Before resorting to asset buying, the Fed could use automatic stabilizers like the Standing Repo Facility or Discount Window loans. These tools indicate market conditions and can prevent liquidity shortages. Discretionary repo operations could also add liquidity to the system if needed, as seen in 2020.

Read more: Analysts game out use of Fed toolkit if market needs central bank’s help