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Fed makes emergency rate cut to combat coronavirus fallout

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There is no liquidity problem so this is clearly a political move to make equity markets feel better. i.e., just an opium hit

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I don't agree with Hegemony much but I thought the same thing when I heard the news earlier this week. It was uncalled for and maybe dangerous as there's not a lot of room for further action if the economy really does tank whether its the fallout from COVID-19 or other reasons.

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Posted (edited)
1 hour ago, IndyPoolPlayer said:

I don't agree with Hegemony much but I thought the same thing when I heard the news earlier this week. It was uncalled for and maybe dangerous as there's not a lot of room for further action if the economy really does tank whether its the fallout from COVID-19 or other reasons.

I think fiscal policy would probably be effective in this situation, although it would take time to improve consumer confidence. Of course that may also depend on the world being willing to continue to finance our overspending.

 

Over the past decade I've become convinced the Fed cares too much about Wall Street and not enough about its two core charges (inflation & unemployment). The Fed is now without some ammo to deal with "real" economic crises and I fret it may rely on QE instead as a first-line policy choice instead of rates.

Edited by hegemony

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