in The acute phase, the reduction of the repo rate by 50 basis points unexpectedly, quickly, and are done in order to counteract the downturn in the economy, as the spread of the new coronavirus could create. Already in last Friday, the Fed was ready to lower interest rates in the wake of the global virussmittan, but the majority of analysts assumed that there would be a first for the central bank’s regularly scheduled meeting on 17 and 18 march, and not now.
the decision, which was taken by all the members of the central committee, was in fact responded to the world’s stock exchanges, is immediately a positive one.
It was a surprise to the Fed as quickly of a rate cut. It was right after the g-7 countries held a telephone conference call, without any tangible result. To the extent to which the lack of results of the discussions were behind the central bank’s decision is unclear. However, it is clear that the Fed has made itself known for being an early adopter with a vengeance, this time even faster than most had expected.
Jerome Powell, who was chairman of the central bank, and also had some of the same words used to describe the current situation in the former ussr.
Then, as now, he was trying to instill confidence.
”the Fed is closely following the developments and their implications for the outlook for the economy. We are going to use the tools and act in an appropriate manner, in order to prop up the economy.”
of course one can also have the central banks come up with similar reductions. However, the European central bank, the Riksbank, normally accelerate more slowly. Sweden does not have the same opportunity as the interest rate already from the beginning set at zero. While the united states has a plusränta.
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