Q: What would you define as the basic attempt of the Federal Reserve ever since economies turned turtle and there was an attempt to bring the global world back on its feet?
A: In the first instance what they essentially did was become the lender of last resort to the banking system. They were the only people that would give various banks and if you remember the Troubled Asset Relief Program (TARP) program and there was a Long Term Refinancing Operation (LTRO) program in Europe, it was all about pushing central bank liquidity into the commercial banking system.
Then they were concentrating on reviving the economy and the way that they tried to revive the economy was to cut interest rates and as we all know they have cut interest rates to zero. When they found that that was not doing the trick completely they began to introduce extraordinary measures as they call them which was the whole Quantitative Easing (QE) program and idea there was to really just flood the banks with money to try and force them to lend into the domestic economies or indeed to get asset prices up. They have succeeded in the latter. They have not succeeded very well in trying to get real economic activity growing all around the world.
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