The Fed has cut rates once again by a half percentage point due to recessionary pressures resulting from the coronavirus. The federal funds rate is now between 1%-1.25%, however, the stock markets fell anyway. While this shock is considered temporary, there is no way of telling how long this might last and how much output will decline. While an interest rate cut doesn't address the cause of the downturn, Jerome Powell said he hoped it would soften damage to spending and confidences, stem financial-market disruptions and speed a recovery once any epidemic is under control.
Do you believe this is the best method of action by the Fed to address a potential recession? If not, what could they do to make a bigger impact rather than just adjusting interest rates?
1 comment:
I think cutting interest rates would be the best move for now due to the uncertainty of the virus. The Fed needs to ensure that fear of the virus doesn't take a total toll over the financial markets, and consumer confidence, and this would be the only way to really do so as of now.
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