In recent weeks, those who were betting on a courageous Fed that would dare to cut interest rates on the market have gained weight in the market. 50 basis pointsas it eventually did. However, there were many doubts as to whether he would do this or, if he took a more cautious stance, leave the decline at half, or 25 points. There was even speculation about an emergency meeting in August.
However, having cut rates by 50 points has not been as exceptional as some might believe since the beginning of this century alone, The four Federal Reserve chairs have made rate cuts of 50 points or more 18 times Previously, motivated by different reasons, yes. Among them, the bursting of the bubble dotcom, the September 11 attack, the great financial crisis of 2008 and the pandemic of 2020.
The current motivation is perhaps the most natural motivation for such a move by a central bank. When rates are abnormally high and inflation is no longer exerting as much pressure, it is normal to see a normalization of the price of money in order to stop the damage it is causing to the economy and the labor market, the first symptoms of which are already being felt. seen. deterioration.
In fact, we could go back to the 80s, when Volcker had to raise rates to a record level of 20% to combat galloping inflation of close to 15% over a year, causing a recession, which is precisely what we now want to avoid with this reversal. There was a time when mortgages were granted at 20%. Although it is true that at that time, the main tool of contraction was the control of the money supply rather than the interest rate. Unemployment reached 11%, the highest rate since the Great Depression, and inflation, as today, was contained before the 1990s.
During the 1990s, Alan Greenspan had a more or less quiet tenure, cutting rates in the first half of the decade and raising them in the second as inflation fell. The call Mmaster Maintaining economic expansion in the United States. However, it has been blamed for causing the bubbles of the first decade of the century. The appearance of the first of them, the dotcom, forced Greenspan to do five consecutive reductions of 50 points between January and May 2001, until the reference was 4%.
In September of the same year, with the shock Provoked by the attack on the Twin Towers in New York, the Fed led a new 50 point cut at an emergency meeting, to which he added two similar cuts in October and November, leaving rates at 2%. This was not enough, since a year later they had to cut the price of money by another 50 points to revive the economy after the crisis.
Since then, the economic expansion has been accompanied by rate increases until September 2007, already with Ben Bernanke in power, the great crisis of subprimeThe following year, the Fed had to catch up. four cups of 50 points, two of 75 points and one of 100 whole in December 2008 to leave the price of silver at 0, in addition to the QE, bringing the balance to $4.5 billion.
Since 2015, inflation and growth have allowed Janet Yellen began to regain momentum and raise rates to 2.5%, a zone that would fall again to revive an economy that was not growing. Until the arrival of the pandemic in 2020 and Jerome Powell had to bring rates back to 0 with a first drop of 50 points and a second of another 100, the last one until today.
