Speech FED Vice Chairman Donald L. Kohn

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Speech
Vice Chairman Donald L. Kohn
At the Cato Institute's Twenty-Sixth Annual Monetary Policy Conference, Washington, D.C.
November 19, 2008

Monetary Policy and Asset Prices Revisited

As you know, we are in the midst of a global financial crisis that is now weighing heavily on economies around the world. Although the outlook remains extremely uncertain, both the fragility of the financial system and the weakness in real activity seem likely to persist for a while. To promote maximum sustainable economic growth and price stability, the Federal Reserve has responded to this crisis by easing monetary policy markedly, and we have greatly expanded our liquidity facilities to keep credit flowing when private lenders have become reluctant or unable to do so. Other central banks have also cut policy rates significantly and expanded their lending. In addition, the federal government and governments around the world have taken extraordinary actions to strengthen financial systems to preserve the ability of households and businesses to borrow and spend.1

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