Fiscal support needed, but Fed still has more to do

The Fed’s revival of financial crisis-era programs and a huge ramp-up in the pace of its open-ended Treasury purchases in recent days could help to stem some of the bleeding in financial markets. But with broader financial conditions still tightening, there is still more the Fed can do to supplement the imminent fiscal stimulus to support demand. Its next steps are likely to include making more explicit its commitment to large open-ended asset purchases, possibly capping longer-term Treasury yields and requesting authority to purchase a wider range of assets.