The Federal Reserve caught the markets off their guard when it
slashed the Federal Funds rate by half a percentage point on April
18.
It was the fourth reduction this year and the second time since
January 3 that the US central bank has cut the key overnight rate
between meetings of its Federal Open Market Committee. "The April
move clearly was a shocker," says David Greenlaw, an economist at
Morgan Stanley. "Still, it was less surprising than the cut on
January 3 - a move that signalled something had changed, from the
standpoint of Fed timing." The Fed had rarely taken such important
steps between FOMC meetings, except in times of crisis. So what's
going on?
The US has been a leader in the trend away from secrecy in central
banking. The Fed changed its procedures as recently as January of
last year to be more open about its goals and...
