Financial Fears Fuels Speculation of an Emergency Rate Cut.
Talk of an emergency Fed rate cut today is circulating, a day ahead of the FOMC's regularly scheduled meeting. Some calls are for as much as a 100 bp easing to the 1% rate again. Additionally, there are also calls for the ECB and the BoE, if not others, to cut rates at the 8:00 to 8:30 ET window. We don't believe further rate cuts are the right medicine currently for this crisis of confidence. The big 75 bp easing last January and the 325 bps in rate cuts over the year haven't saved Bear Stearns, Lehman, etc., while the economy continued to chug along. The Fed's policy statements since June when the Fed left rates at 2%, and subsequent Fed speak, have suggested policymakers as well are hesitant to knock rate down any further. Ex Fed President Poole said he'd be surprised if the Fed eased. Meanwhile, the ECB's Trichet in recent comments that he'll remain true to the primary mandate of price stability. However, he'd be more or less off the hook by a joint move and a well crafted policy statement.
2008 Al Bawaba (Albawaba.com)
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|Title Annotation:||Federal Open Market Committee|
|Article Type:||Brief article|
|Date:||Sep 15, 2008|
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