US Fed cut its rate target to a range of 0-0.25% from 1%, a drastic measure championed by Ben Bernanke to stave off the impact of recession. This brings the overnight lending benchmark rate, the Federal Funds Rate, to its lowest ever. Note that the Fed has specified a range of rates, not an exact rate. This may suggest they are unable to control tightly the market interest rate any longer.
The Fed is combining the rate-cut strategy with buying up bad assets from banks. The last time something as drastic in terms of policy shift has been done by the Fed was 1979, under Paul Volcker (MA Political Economy, Harvard). A that time the Fed initiated a severe recession while trying to fight the inflation which had built up in the aftermath of the Vietnam War, which ended in 1975.
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