April 30, 2008 2:49
The Fed cuts a quarter point. What?!? You don't find that exciting?
So after two days of gabbing, the folks on Federal Open Market Committee did what was mostly expected of them and cut the intended Federal Funds rate down to 2%. I really can't be bothered to come up with something to say about a measly quarter-point rate cut, so I'm going to outsource to my buddy Andy Busch at BMO Capital Markets:
Taken together, the Fed's actions are disappointing from the standpoint of the US dollar and for dampening commodity prices. Fed is clearly still willing to risk inflation over growth at this point. I think this is a mistake as holding off from cutting would've given them room to cut later should they need it and would've cooled some commodity inflation. The 8-2 vote shows opposition to the easing remains within the board.No tough love from Bernanke & Co. yet on inflation nor on the economy. US dollar should get beat up.
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Reader Comments (1)
This is the 4th time the Fed is cutting the rate in as many months this year, simply incredible. Is this the way to combat the declining economy in the US? I doubt. There must be other more functional approach.
Take for instance the Iraq War. It is estimated that almost 1 trillion dollars have already been burnt, and someone suggests that it could well escalate to the colossal 3 billions a few years down the road. Imagine if this gargantuan sum were to be donated and used to alleviate the poverty of the 1 billion impoverished worldwide, offering them better education, food, healthcare, shelter and a chance for entrepreneurship. The chain reactions of such economic processes and transactions thus generated would certainly help to build a sounder global economy for all.
It is time to quit Iraq to save lives and money. Perhaps it is the crucial way to arrest the downslide of the greenback and halt the onslaught of the nasty recession. Better now than later ...
Posted by Tan Boon Tee | May 1, 2008 12:52 AM