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Federal Reserve Policymakers Stand Up to Wall Street’s Easy-Money Crowd
The U.S. central bank’s Federal Open Market Committee (FOMC) yesterday (Tuesday) left the benchmark Federal Funds rate target at 2.0%, after many had expected the central bank policymaking committee to cut rates in the wake of the Lehman Brothers Holdings Inc. (LEH) collapse.
What’s more, the statement that was issued after the policymaking meeting was somewhat “hawkish,†suggesting that the U.S. Federal Reserve is awakening to the dangers of persistent and gently rising inflation. Wall Street was initially spooked; it had hoped for the usual bounce that follows a Fed rate cut. However, investors subsequently decided the Fed’s inaction meant things…
17Sep2008 | Money Morning | Comments Off | ContinuedTop Federal Reserve Officials Predict Weak Second Half; Warn Growth May Not Return Until 2010
Two top U.S. Federal Reserve officials on Friday predicted a weak second half for the U.S. economy, warning that strong U.S. growth may not return until 2010.
Atlanta Federal Reserve Bank President Dennis P. Lockhart and Chicago Fed Bank President Charles L. Evans both said the U.S. central bank is in no hurry to start raising rates while the American economy is sputtering badly because of an ongoing global financial crisis, a sagging housing market and inflationary pressures caused by a yearlong run-up in food-and-energy prices.
Indeed, Lockhart even said he wouldn’t rule out actually cutting interest rates if economic circumstances warranted…
18Aug2008 | Money Morning | Comments Off | ContinuedFed Holds Rates Steady in Face of Upside Inflation Risk
Citing the risk of high inflation, the U.S. Federal Reserve voted to hold the Federal Funds rate steady at 2.0% yesterday (Wednesday).
“Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased,” the accompanying Federal Open Market Committee (FOMC) statement read.
The statement did not allude to any future rate hikes at the next FOMC meetings scheduled for August or September. It was a very balanced statement overall, acknowledging the dual threats of stagnation and inflation currently facing the U.S. economy.
“It is more or less a neutral…
26Jun2008 | Money Morning | Comments Off | ContinuedNot Enough Candy
So, the Federal Reserve Open Market Committee lowered the target Federal Funds interest rate by half a point, to 3 percent. In response, the Dow Industrials promptly rocketed up 200 points and then just as quickly headed south, ending 37 points down on the day. It seems that a half point drop was still not enough to satisfy the players. It was not enough candy, because even at 3%, the Federal Funds rate is still about three-quarters of a point higher than the 3-month Treasury Bill rate. The Fed lags the Treasury Bill market, which is par for the course.…
31Jan2008 | William Kurtz | Comments Off | Continued
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