The previous blog showed that for the most recent stock market crash the Fed funds rate was a good indicator. Let's look at the previous crash in 2000. The below table has the date the Fed took action and the resulting rate.
Date/ Fed Funds Rate
February 2, 2000 / 5.75
March 21, 2000 / 6.00
May 16, 2000 / 6.50
January 3, 2001 / 6.00
January 31, 2001 / 5.50
March 20, 2001 / 5.00
April 18, 2001 / 4.50
May 15, 2001 / 4.00
June 27, 2001 / 3.75
August 21, 2001 / 3.50
September 17, 2001 / 3.00
October 2, 2001 / 2.50
November 6, 2001 / 2.00
December 11, 2001 / 1.75
November 6, 2002 / 1.25
June 25, 2003 / 1.00
Note the rate was well above the 3% target rate and the change on May 2000 as an indicator. Also it took 3 years to get to the lowest rate of 1.00% about 3 times longer than the current crisis which indicates that this crisis is unprecedented in speed.
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