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What the Rate Cut Means
Tuesday’s move by the Federal Open Market Committee—to cut its target for the federal funds rate to the lowest on record, between zero and 0.25 percent, and leave it there for a while; and buy mortgage-related securities and possibly Treasuries—is a “formidable display of monetary aggression,” The Economist reports. Still, it’s not as dramatic as it seems: The rate cut will have “no measurable impact on the actual funds rate,” and the Fed had already said it would buy up billions in debt and consider Treasury purchases. Tuesday’s announcement, then, amounts to an “assurance of radicalism,” according to The Economist. It was enough to buoy Wall Street for a day; whether it will be enough is the big question.
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