The increase in risk led to a major financial crisis that has been cured, thanks in part to the actions by the Federal Reserve that I’ve just described. The decrease in net worth led to a major recession and ongoing slow recovery. The Federal Reserve’s reduction in interest rates has lessened the impact of this change in net worth.
Monetary Policy Over the second half of 2018, as the labor market kept strengthening and economic activity continued to expand strongly, the FOMC gradually moved interest rates toward levels that are more normal for a healthy economy.