Friday news conference was clearly designed to boost the stock market without much else going for it. (TV ratings and the stock market are clearly the two main indicators that the WH follows religiously). Just wondering if people now think pressure on FED has crossed that line.
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I had the same thought at first, but it does appear that it was not unilateral by Fed, but along with ECB, BoE, and others. So less likely to be solely due to WH pressure.
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From someone who follows "econ/finance", .. I'm not being facetious when I say this, .. you are not going to get a single answer that is accurate.
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I know. But there is sometimes emerging consensus-y moments when something is obvious versus not that clear.
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how much truth was there to the idea the the WH had been previously pressuring fed to keep interest rates weirdly low when economy was doing great, giving less flexibility now?
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Could look like that, but also, I think everyone’s agreed we would need lower rates eventually so there’s no added benefit of waiting. Especially if coordinated globally.
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We think that monetary policy has "long and variable lags", ie a few quarters. Unusually, we know for sure that a recession is coming, so it makes sense act now. Probably fiscal policy would be more useful however (the problem isn't people are afraid to spend but they can't work)
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Ie, ordinary macroeconomics says there is a strong (but highly uncertain) case to be made for the Fed to act precisely now. So there is no reason to think they were pressured by WH or even that the Fed was thinking about the stock market at all.
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Layperson question: Can someone explain why yesterday's cut amounted to all the ammunition? They could always do negative as many European countries have done, right?
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Yes, I agree that characterizing this as having spent all ammunition is incorrect. They can and will have more ability to buy securities just as they did in the 2008 crisis.
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