The Federal Reserve Needs to Cut Rates to Zero Now
The central bank needs to face reality with the economy probably in a recession already.
Will the Federal Reserve do what is needed to save the economy?
Photographer: Chip Somodevilla/Getty Images
The Federal Reserve is forecast to ease monetary policy further next week, but considering the escalating turmoil on Wall Street, we should be prepared for the central bank to act much sooner. And we should be prepared for something big. The Fed can’t delay any longer.
Policy makers have a big decision to make. Do they continue with their usual approach of gradually reducing interest rates? Or do they make a more aggressive move? There is a strong argument for the Fed to take rates back to the zero bound all at once from the current range of 1% to 1.25% -- and without delay.