When interpreting the US Federal Reserve’s weekend announcement of new measures to mitigate the fallout from the Covid-19 pandemic, it is important not to confuse motion with action.
Arguably, the Fed’s latest move to ease monetary policy is unprecedented, not least because it was announced on a Sunday afternoon. The Fed cut the federal funds rate by 100 basis points (to the 0-0.25% range), which will likely translate into a meaningful reduction in the marginal cost of corporate and household borrowing from banks.
