Tweet
Informative discussion of how central banks should react to stock market crashes, based on their mandates (from the FT):
http://blogs.ft.com/maverecon/2008/0...ry-w.html#more
Written on Monday, it's out of date but provides some good background for understanding this stuff.
It concludes:
>
http://blogs.ft.com/maverecon/2008/0...ry-w.html#more
Written on Monday, it's out of date but provides some good background for understanding this stuff.
It concludes:
Neither the ECB nor the Bank of England will panic at the sight of a large drop in global stock markets. I am less convinced of the sang froid of the Fed when faced with a chorus of Wall Street howls and whines. They could well be panicked into a 50 or even a 75 basis points cut in the Federal Funds target rate at their next meeting, or even arrange to have an interim meeting – a sure indicator of panic football.