Again reflecting the risk-management perspective I described earlier, the FOMC lowered its target for the federal funds rate 50 basis points before the reopening of the markets on Monday, September 17, 2001. In explaining its action, the FOMC pointed to a less sanguine economic outlook and to significant downside risks associated with that outlook.
Besides the crisis of 1998 and the September 11 terrorist attacks, other episodes of financial turmoil were important, but these episodes did not raise the same level of concern that the negative shock might be transmitted to the nonfinancial economy in a rapid and disorderly fashion.