Fed Launches "Rate-Peg-Instead-Of-QE" Trial Balloon For Next Crisis

https://wolfstreet.com/2019/05/08/fed-launches-interest-rate-peg-instead-of-qe-trial-balloon-for-next-crisis/

Under this policy, the Federal Reserve would stand ready to use its balance sheet to hit the targeted interest rate, but unlike the asset purchases that were undertaken in the recent recession, there would be no specific commitments with regard to purchases of Treasury securities.

 The interest-rate peg became effective in July 1942 and lasted through June 1947. The Reserve Banks reduced their discount rate to 1 percent and created a preferential rate of one-half percent for loans secured by short-term government obligations, substantially below the 3 to 7 percent that had been common during the 1920s.


May you live in interesting times.