Reuters: Don't expect oil shocks to move the Fed17 September 2019 | 03:30 | FOCUS News Agency
The Fed should enact a “big interest rate drop, stimulus,” at its meeting this week, which ends Wednesday, Trump said on Twitter on Monday.
However historical precedent and the United States’ changing energy diet suggest the Fed is likely to stick with an expected quarter of a point interest rate cut and go no further.
The Fed has responded to past crisis events including the September 2001 terrorist attacks and the Black Friday market collapse in the 1980s. But it acted then to address trouble in financial markets that risked creating broader problems.
Crises can cause banks and other financial firms to become wary of lending, for example, and make cash less available throughout the economy. In the months after the 2001 attacks, for example, the Fed lowered rates 1.75 percentage points, and took measures to make sure banks had liquidity and could continue clearing checks.
The full impact of the Saudi bombings may not be immediately clear. It will depend on both how quickly the Saudi facility resumes full production, and whether the attack leads to a broader conflict in the region.
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