Targeting the Federal Funds Rate
7 pages (1750 words)
, Case Study
The researcher states that in cutting the target rate, the FOMC expressed concern that the fallout from rising mortgage default rates could spread to the wider economy. The fear was that lenders, fearing a meltdown in the housing sector, were becoming overly cautious. This fear of lending was creating a “credit crunch” that could slow investment and economic growth.