BOTH BARRELS OF THE heavy policy guns–fiscal and monetary policy–are now aimed at the slowdown. The president and the congress have worked out a stimulus package that will pump some $150 billion into the U.S. economy. Bureaucracies being what they are, it will take the Treasury more time than it should to get the checks into the mail. But by early or mid-summer American will have some more money, either to spend (as the sponsors of the program hope), or with which to pay down some of their credit card balances.
Meanwhile, back at the Federal Reserve Board’s offices, officials are watching to see whether their recent interest rate cuts totaling 1.25 percent, when combined with the stimulus, will put the economy back on a growth path. Now at 3 percent, the Fed funds rate was a much higher 5.25 percent only a few months ago. Chairman Ben Bernanke, who on Friday reached the half-way point in his four-year term, is surely hoping that by the time he is up for reappointment, his rate cuts will have had their intended effect, and the new president will follow tradition and reappoint him.
