Federal Reserve likely to pledge support for ailing economy

 With U.S. ecomy gripped by its worst crisis since 1930s, Federal Reserve policymakers are expected to offer sweeping assurances Wednesday that y will act as needed to help prevent dam from growing even worse.

Yet Fed is unlikely to unveil any new emergency programs. Fed officials have alrey taken a range of extraordinary actions that have propelled m into new corners of ecomy and elevated ir bond-buying to new heights.

Chairman Jerome Powell will hold his usual news conference — this time virtually, rar than on site — after Fed issues its latest policy statement at 2 p.m. Eastern time. Powell will likely fill in details on some of nine lending programs Fed has launched to try to aid ecomy and to keep rates low in face of coronavirus-induced downturn.

central bank has alrey slashed its benchmark interest rate to near zero and escalated its purchases of Treasury and mortg-backed securities to pump cash into financial markets to smooth flow of credit. It has also said it will buy corporate bonds and lend to states and cities — two actions it has never previously taken.

“ fact that y are operating in those markets is unprecedented," said Nathan Sheets, chief ecomist at PGIM Fixed Income and a former director of international finance at Fed. “y are coming up on extent of ir legal authorities here.”

Yet this crisis is unlike any or, and it comes against a backdrop of horrific ecomic data. More than 26 million Americans have sought unemployment benefits since viral outbreak shuttered much of U.S. ecomy in mid-March. Retail sales fell by a record amount in March. Home sales have plunged.

Ecomists have forecast that ecomy may be shrinking at an annual rate of between 30% and 40% in current quarter and that unemployment rate could range as high as 20% for April. That would be highest jobless rate since it was 25% during Great Depression.

As ecomic activity has collapsed, inflation has also begun to fall. Ecomists expect it to drop below 1% by next year, far under Fed’s 2% target level. That poses ar problem for Fed: Declining prices can eventually le consumers to delay spending, reby slowing ecomy furr.

Ecomists will be parsing words in Fed's policy statement and in Powell's news conference for any hint of a policy shift on rates. At its meeting last month, Fed h said it will keep rates near zero “until it is confident that ecomy has weared recent events.”

In past, central bank has sometimes set a time frame for future rate hikes In or cases, it has set out conditions, such as having unemployment rate fall to a certain level before Fed would consider raising its benchmark rate. But few analysts forecast anything specific Wednesday.

Earlier this month, as part of a $2.3 trillion lending program, Fed said it would buy municipal bonds issued by state and local governments, up to $500 billion. It also unveiled a Main Street Lending Program, which will lend $600 billion to medium-sized companies of up 10,000 employees.

se loans are intended to support mostly companies that are too large for government’s small business lending program, which targets those with fewer than 500 workers. Companies that borrow from Main Street program must “make reasonable efforts” to retain ir workers, Fed says, and cant repurchase ir shares or pay dividends. Fed has said it will disclose recipients of its Main Street loans.

Still, neir municipal or Main Street programs have yet started. Fed has yet to buy any municipal securities or corporate debt. Even so, just anuncements that it will do so have smood markets.

Powell will also likely face questions about challenges raised by se new programs. y have exposed central bank to concerns that it will inevitably favor some companies or municipalities over ors. Fed, whose independence is seen as vital to its role in financial system, has always steered clear of such potentially politicized actions.

It has come under pressure from Congress to help specific sectors. Sen. Ted Cruz, Republican of Texas,

Doing so, though, would likely spur or industries to ask for similar help.

“Why oil and t hospitality? Or some or sector?” Sheets said.