Thus, understanding how monetary policy affects the broader economy necessarily entails understanding both how policy actions affect key financial markets, as well as how changes in asset prices and returns in these markets in turn affect the behavior of households, firms, and other decisionmakers. Studying these links is an ongoing enterprise of monetary economists both within and outside the Federal Reserve System.
After all that has occurred over the past two months, it would seem that the most pronounced impact – aside from major, ongoing concerns regarding the structured-product market – has been an increase in the spreads in money markets – whether in ABCP, corporate paper, or bankers' acceptances – of most industrialized countries.