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Question
What actions did the Fed take in response to the recession of 2001?
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Answered 2 years ago
In 2001, the Federal Reserve reduced interest rates in the federal funds market-overnight loans between banks and the discount window-overnight loans made by Federal Reserve Banks to depository institutions to tackle the declining economy and recession. Therefore, by lowering interest rates and also, by cutting the federal funds.
Answered 2 years ago
The recession of 2001 was so mild and so short—lasting about eight months—that policymakers altogether ignored discretionary fiscal policy. On the contrary, Fed was actively lowering discount rate on a monthly basis in order to stimulate the economy. The policy worked and Fed took much of the credit for a short duration.
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