by Tho Bishop
Mises.org
Two weeks ago, Fed chair Jay Powell declared the “fundamentals of the U.S. economy strong,” while simultaneously announcing the largest interest rate cut since 2008 in the face of global pressures stemming from the coronavirus.
Last week, the Fed escalated its repo operations in a desperate attempt to boost short-term liquidity for large financial institutions.
But this past weekend, the Federal Reserve made its most radical moves since 2008. The headlines focused on cutting the federal funds rate back to 0–0.25 percent and a major $700 billion reboot of quantitative easing. The Fed also cut reserve requirements, maintained paying interest on excess reserves (0.1 percent), and cut its discount window down to 0.25 percent from 1.75 percent.
The discount window cut may be the biggest deal.