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Fed rate moves


?Federal Reserve surprised the markets with a 0.75-point reduction last week?according to?Kevin Hassett, director of economic-policy studies at the American Enterprise Institute and according to Hassett’s commentary?on is a reduction in the rate that size?had never happened?before. Ever since the Fed began announcing changes in its policy stance in February 1994, it has been rare for the central bank to move between regularly scheduled Open Market Committee meetings. Yet even in those moments when it did take emergency action, the Fed never reduced rates by as much as it did on Jan. 22 2008.The raw economic data today are a little better than they were in 2001, and a little worse than they were in 1998. Equity markets, on the other hand, are much worse than they were in 2001, and even worse than they were in 1998. Since actions in similar periods under similar conditions proved, in retrospect, to be propitiously timed, it is easy to justify more aggressive action this time around. One can even say with confidence that Feds of the past would, faced with today’s data, almost surely have acted in a similar manner. Kevin Hassett,? is an adviser to Republican Senator John McCain of Arizona in his bid for the 2008 presidential nomination


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