And given the international extent of these vulnerabilities and interconnections, the crisis quickly became global. Central banks around the world responded forcefully. From the outset, the Federal Reserve vigorously used its traditional toolkit for managing short-term interest rates.
The Federal Reserve reduced the target federal funds rate from 5-1/4 percent in August 2007 to a range of 0 to 1/4 percent by the end of 2008. International coordination on policy rate decisions is rare, but in October 2008, the Federal Reserve announced a reduction in its policy rate jointly with five other major central banks: the Bank of Canada, the Bank of England, the European Central Bank, the Swedish Riksbank, and the Swiss National Bank.