Respuesta :
Before the financial crisis of 2008, if the Fed wanted to lower the Federal funds rate, it bought bonds from banks and the public.
In order to strengthen the liquidity of financial firms and promote improved circumstances in financial markets, the Federal Reserve aggressively responded to the financial crisis that erupted in the summer of 2007. Because reduced finance costs can encourage borrowing and investing, the Fed lowers interest rates to promote economic growth.
Rates, on the other hand, might encourage upsurge and subsequent inflation when they are too low, which would lower purchasing power and jeopardise the sustainability of the economic development. In order to enhance bank reserves and lower the federal funds rate, the Fed purchases government securities.
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