
The Fed’s rate rise shows it is confident about the banks
So, things really are different this time. The US Federal Reserve has decided to raise its Federal Funds Rate (its main interest rate) by a quarter-point, to 4.75 per cent – 5 per cent, in spite of a banking crisis that has seen two large banks fail in the past fortnight. For the past two decades, this sort of thing didn’t happen. Under the unwritten laws of the ‘Greenspan put’, the Fed could be relied upon to provide some form of stimulus at the first sign of financial trouble. It began with the collapse of the hedge fund Long Term Capital Management in 1998, when the Fed put together a
