The Kindest Cut Of All

The Fed unleashes a surprise move to reverse a market-driven decline

No policymaker has studied the New Economy's contours more closely than Alan Greenspan. The Federal Reserve chairman was among the first to proselytize about the growth payoff of the technological revolution. So it's no surprise that Greenspan has swiftly swung into action now that a rocket-propelled tech boom has given way to a steep tech dive that risks dragging down the economy. On Jan. 3, smack in the middle of George W. Bush's carefully orchestrated economic summit in Austin, Greenspan stunned the President-elect and the markets with an atypically assertive move. Without waiting for a scheduled policy meeting, Greenspan's Fed slashed interest rates by 50 basis points and signaled that more cuts were in the offing.

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