This translation has been automatically generated and has not been verified for accuracy.The sudden stress in U.S. dollar funding markets in recent days has spooked people by stirring memories of the 2008 crisis. A rocketing repo rate -- the key measure of liquidity in the global banking system -- and a jump in the U.S. Federal Reserve’s target interest rate to levels not seen since 2008 forced the New York Fed to intervene four times to maintain the Fed funds rate in the 1.75%-2.0% range.
The Fed judges the U.S. economy can get on fine without further short-term stimulus. Upcoming data may show us whether that view is accurate or if, in chairman Jerome Powell’s words, “a more extensive sequence of rate cuts could be appropriate”. In fact, markets’ mood has improved of late, first of all as parliament passed a law to avert a no-deal Brexit by end-October. More recently, comments by EU Commission President Jean-Claude Juncker stirred hopes of a Brexit deal, sending the pound to its highest level since July and putting it on track for its best month this year.