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The Fed didn’t surprise anyone today, bowing to the market’s wishes for another .25% cut to the fed funds rate; bringing the benchmark lending rate to 4.5%.
From Market Watch:
While growth has been solid, “the pace of economic expansion will likely slow in the near-term, partly reflecting the intensification of the housing correction,” the Federal Open Market Committee said in a statement.
The rate cut, along with other moves by the Fed, “should help forestall some of the adverse effects on the broader economy” from the disruption of financial markets.
The FOMC said inflation risks remain. Core inflation readings have improved modestly, “but recent increases in energy and commodity prices, among other factors, may put renewed upward pressure on inflation,” the FOMC said.
The vote was 9-1, with Kansas City Fed President Thomas Hoenig voting to keep rates steady.
I would just like to thank Thomas Hoenig for having the courage to be the lone dissenter on the side of caution and prudence. I would also like to kiss the value of my American dollar good bye. I will have more later after I work longer and harder for less real wealth. Thanks Bernanke - really.
Thank you Obi-Wan Bernanke. You know how to encourage savings.
The fed was originaly organized to help stablize the banking system. Fighting inflation is important but did not become part of their mandate until relatively recently.
Our banking system is extremely ill. It has not been this ill since the depression. Did you really think that one cut from the fed is going to fix it?
How does this discorage people from investing. Quite frankly I suspect everyone at the moment is trying a lot hard to save every dollar they can.
There is a world of opportunity to invest. Far more choices than we have ever had in the history of the world. We have televisions stations completly dedicated to helping people understand their investing options. We have countless newspapers and magazines dedicated to investing as well.
Gee i think as of this morning the dow is up over 12% for the year.
I suspect that the people that are most upset about the fed cut are the same ones that want every dollar protected from tax cuts while our nations spends hundreds of billions more than we have every year. You are probally also the same ones cashing your social security checks and fighting to protect your checks while you know good and well that future generations are getting screwed.
Also in case you didn’t read or hear the fed indicated it was neutral in its forward thinking on rate decisions. Its not like they want to cut rates….they have too.
Frankly, I think Bernanke + Co are doing a great job - much better than Greenspan. Inflation IS the number 1 mandate for the Fed to control. The health of the overall economy is paramount - not one sector or another. The 1/2 point cut followed by the 1/4 with a neutral bias tells us they are really focusing on the big picture. Our economy has proven itself amazingly diverse and resistant to many perils (even 9/11).Sure, there are problem areas - very serious ones - but Bernanke is dealing with the cards he was dealt quite effectively IMO.
I-Man, the problem is that the inflation numbers that the government counts are completely out of line with reality. Do you think oil hits $100/barrel w/out the cuts?
I-Man these cuts serve only to bailout the banks that are suffering from the subprime mess. By putting more zeros in the bankers accounts they increase the money supply, this increase in money supply lowers the value of our dollars because there is so much of it circulating in the system thus cheapening our money. In order to buy real goods it will cost us more green paper. Inflation might be a good thing if our salaries increase but that doesn’t happen. The banking and wall street elite are the first to benefit from the cut because they are the first ones to use the money, but at the same time it hurts the middle and low income workers because their salaries do not rise yet they are the ones who are producing the goods for the economy. This corrupt system only benefits the financial elites (leaches) because they do not produce anything of value yet they suck all real wealth and produce from the masses.
A book I suggest you read is The Lost Science of Money by Stephen Zarlenga at the American Monetary Institute. Its a real good read that should be in every economics curiculum.