Will the Fed Pause After the Next Cut?
Greg Ip of the WSJ:
Source:
Fed Weighs Pause After Next Rate Cut
Inflation Worries Loom as Economy Continues to Stall
GREG IP
WSJ, April 24, 2008; Page A1
http://online.wsj.com/article/SB120899756185139975.html
Friday, April 25, 2008 | 12:30 AM | Permalink
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Why bother cutting rates when you have been granted carte blanche to deviate from your mandated function to do whatever the f@ck you please? Time to start taking boat loans at the window!!!
Posted by: shoeless | Apr 25, 2008 1:40:07 AM
It seems that the REAL function of the fed is to avoid deflation. Consequently, even though they may jawbone about pausing, they won't pause.
The cat's out of the bag as far as dollar inflation is concerned. Look at the diminishing rate of foreign purchases of US treasuries. Does the fed care? Only if it stops dead. That would mean the draw of the US market is no longer cost effective for foreign countries. We're not there yet. So it's inflate away!
Posted by: AGG | Apr 25, 2008 2:42:46 AM
Yikes! Will someone please buy Greg Ip some new and better books?
Roger Morris? Larry Elder?
Puh-leeze!
But he sounds about right on the Fed.
Posted by: Charles | Apr 25, 2008 4:08:05 AM
I definitly think so. I think Fed Speak the last 7-10 days has been highlighting the high inflation senario. I think the perfer not to cut this time but that they probably will do 25bp (i previously thought they would do ntg) and basically say no more in the near term future.
Banker
Posted by: Banker | Apr 25, 2008 7:21:14 AM
somewhat OT, does the massive dilution in bank stocks figure into these companies that hold there dividends intact(ala bac). Wouldn't that create additional significant cash commitments going forward, as well as higher PE modeling?
Posted by: mitch | Apr 25, 2008 7:28:11 AM
Where are all the folks that want merit pay for teachers, cops, etc.? Why don't they want the 'setter of the price of money,' to be remunerated on an incentive basis?
Pay the Fed Chairman based on his ability to keep dollar index in a small band. The higher the sigma, the lower his pay, or just give him a times series of strangles on the DXY (Taxed as carried interest thought, be fair.)
Heck, make a TV show out of it. Two sigma and the Fed governors go to the boardroom to meet The Donald.
...hums that O'Jays song "For the Love of Money"
Posted by: VennData | Apr 25, 2008 8:17:33 AM
Did he fart at 00:19?
Posted by: Stackelberg | Apr 25, 2008 8:51:35 AM
Speaking of fed cuts, I will give you a little additional information about the credit crisis...since 2003, I have been buying callable C.D.'s which of course can be called by the bank of issue after an agreed upon time interval...well, since the fed began lowering rates, I have had more than half of my funds called....and invested in alternate vehicles...what I have noticed is that Countrywide has not called a single C.D. even though that is not true of any other bank...I think this is to keep principal and waiting on the Bank of America buyout/bailout...and these cd's are paying 6.5 per cent or greater (they are long term cds)...just for you guys information....I think B of A is in for a shock when the deal closes....I know they will want to call these outstanding high rate cd's and this may not have gone into their calculations....
Posted by: Alan Greenspan | Apr 25, 2008 9:25:32 AM
Given that it takes 6 months for a given Fed rate cut to take effect, there is little POLITICAL reason for them to cut further, regardless of what the economy is doing.
Posted by: DL | Apr 25, 2008 4:04:33 PM
ben just hurry up and fire all your bullets so we can stop worrying about what you'll do
Posted by: baddriver | Apr 25, 2008 4:12:31 PM
