"So, back to the Fed. There is growing speculation that it is working on moves other than further rate cuts to ease monetary policy. These suggestions have been denied, but nonetheless the problem is evident. Indeed, the Fed’s reluctance to cut interest rates during the Iraq crisis and boost business and investor confidence rather testifies to an awareness that it is running out of rope.
Among suggestions around the markets to boost money supply is a Fed buying programme of long dated securities in open market operations. But the practical benefits may prove meagre while running the risk of undermining credibility in rate reductions when they do come. "
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