One wonders whether the Fed knows what it’s doing or whether it’s simply too frightened of rocking the boat. At yesterday’s FOMC rate-setting meeting most Committee members votes to trim the Fed Funds target to 1.5 to 1.75 per cent as had been priced in by markets for weeks. Over those same weeks, emergency borrowing via the repo market at the New York Fed’s discount window has been going on, to the tune of hundreds of billions of dollars. In yesterday’s statement accompanying the rate decision they saw: ‘’the current stance of monetary policy as likely to remain appropriate’’.
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