The end of the easing cycle?

摘要

A historic credit easing cycle appears to have ended. You can imagine scenarios that would send the recession into extra innings and necessitate further Federal Reserve rate cuts, but it looks like the Fed's 11 rate cuts last year will suffice. This does not mean, however, that a tightening cycle is about to begin. What a breathtaking time for monetary policy it has been! Those who do not have to make the tough policy decisions have second-guessed the Fed―both for not tightening soon enough to con-tain the high tech investment boom and for not easing fast enough to counter the ensuing bust. But it's hard to fault the series of bold actions the Fed took last year, as it moved the federal funds rate from 6(1/2)% all the way down to 1(3/4)%. The Fed's reaction to the Sept. 11 terrorist attacks, which went well beyond rate cutting to include quick-footed moves to keep the payments system operating and prevent the financial system from imploding, will long be considered a classic example of how a central bank should behave in a crisis.