Tuesday’s aggressive move by the Federal Reserve represents an urgent effort to catch up with – and it is hoped get ahead of – the rapid deterioration in the US economic outlook.
It also represents an implicit admission by the US central bank that it had fallen behind the curve on monetary policy.
Policymakers were increasingly concerned that while they had cut interest rates by 100 basis points since the credit crisis began, rates were still far too high, given the state of the economy. In particular, they had cut rates by only 25 basis points since the end of October – a shift officials recognised was not enough to offset the deterioration in financial conditions, never mind provide any insurance against the worst-case risks to growth.
In their defence, the ....read more:Weak data force bank to take bold approach
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