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The Federal Reserve: Ground zero

 

Published 12/18/2008 at The Economist: Full print edition

Out of conventional ammunition, the Fed uses its balance-sheet to battle the slump CENTRAL bankers ordinarily strive to be boring. But these are not ordinary times. On December 16th the Federal Reserve unveiled a three-part assault on America’s slump that lit up the news wires like a pyrotechnic display. The Fed’s policy panel, the Federal Open Market Committee (FOMC), announced that it had cut its target for the federal funds rate to between zero and 0.25%, the lowest on record; it indicated it would stay there “for some time”; and having used up its conventional monetary firepower, it promised an unconventional strategy, such as the buying of mortgage-related securities and, possibly, Treasuries to lower long-term borrowing costs. ... (link)

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