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The US Federal Reserve has announced the first emergency interest rate cut since the 2008 financial crisis. The cut aims to give the US economy a jolt in the face of concerns about the coronavirus outbreak.
RT’s Boom Bust talks to former Fed insider Danielle DiMartino Booth about the bank’s decision and why the markets have continued to slide.
“I think the Fed needs to step back and say these are rate cuts, this is monetary policy, this is not going to be able to address what is happening in the economy due to the coronovirus,” she says.
Now is the time for the small businesses’ administration to work in coordination with all banking regulatory authorities, she adds.
According to Booth, the last three generations of Fed chairs (Alan Greenspan, Ben Bernanke and Janet Yellen) have “allowed themselves to be bullied, pushed into the corner and do the heavy fiscal lifting when it’s really not their place to do so.”
Booth says it is time for Jerome Powell to say ‘The Fed Reserve is happy to coordinate with entities in Washington, to help facilitate any type of policy, to provide relief but our direct tool box is not efficacious, it does not work in ailing what is going to be harming the US economy.’
It is unfortunate to see the markets making monetary policy, Booth adds.