by Pater Tenebrarum
Acting Man
Easy Money Becomes Even Easier
Last week the FOMC surprised the markets with a rare inter-meeting rate cut. As the FOMC statement released on the occasion reveals, the decision to cut the federal funds rate by a hefty 50 basis points was unanimous. The much-lamented “zero bound” is coming closer rather quickly.
[…] As Mish notes here, Mr. Powell stated the following in remarks to the press after the announcement:
“We do recognize a rate cut will not reduce the rate of infection, it won’t fix a broken supply chain. We get that,” Mr. Powell said.
Wise words, chair-person, wise words. Why cut rates then, if none of these objectives can be achieved? The explanation according to Mr. Powell: