The fresh round stimulus will include purchases of corporate bonds along with US Treasuries under a programme called the Secondary Market Corporate Credit Facility, a move which did not occur during the Global Financial Crisis in 2008.
The measures will allow the purchase of corporate bond ETFs, an unprecedented move for the US central bank.
The Fed said in a statement on Monday: “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.
“The Federal Reserve is using its full range of authorities to provide powerful support for the flow of credit to American families and businesses.”
The move comes after the Trump administration officials and Congress locked horns over a $1.8trn bailout package for US businesses amid concerns over the long-term impact of the coronavirus pandemic on the economy.
The virus, which has already infected over 350,000 people worldwide, has sent markets tumbling over the past few weeks.
The S&P 500 has fallen 33% from the highs seen in February with the Fed’s measures doing little to halt the decline.
Kevin Doran, chief investment officer at AJ Bell, commented: “The Fed has opted to go nuclear with the promise to unleash uncapped QE.
“Impressive in another era, but essentially still trench warfare in a world where the enemy has gone airborne.
“Providing liquidity to markets is helpful but shoring up asset prices is not what’s called for this time around.”