[RspecMAuthortah]

> Why would they start QE? Fed rate is at 4% right now, there's more than enough room to drop rates if an issue occurs.

Right but that will also increase demand and induce more inflation, no? So Fed will be perpetually stuck, in theory at least, to find a balance in their dual mandates.

[dragontamer]

Its like monetary policy is only a tiny piece of overall policy.

The big guns is Congress, not the Fed. Possibly the President if you consider things like averting the big Railroad Union strike last week (which would have certainly caused more inflation as shipping costs could have gone up).

Lots of little fires happening around the country. The fed has one lever: interest rates. Congress / President has the other levers.

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Still though: we watch the Fed because the prime rate has a large effect on the value of investments, especially in the question of stocks vs bonds. Its important for the individual investor to follow.

[karatinversion]

The fed has to keep adjusting rates as economic conditions change, yes.