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A rate cut tomorrow?
Monday, September 15, 2008
A short time ago on CNBC, Jim Cramer called for a half-point rate cut for the Federal Reserve meeting this week. He seems to usually get what he wants and, as shown below, Fed funds futures traders seem to be leaning in the same direction.
More importantly, a re-characterization of the U.S. dollar's recent surge as something of an "over-shoot" is throwing a new wrinkle into many markets around the world. The old greenback doesn't look nearly as "less bad" compared to other paper money around the world as it did a week ago.
4 comments:
I can already see the headline for after the FOMC meeting: "Dollar surges after Fed holds rates steady"
Ridiculous.... holding rates steady at two percent is a sign of a strong currency....
That's funny.
So does the $50 billion in Fed-injected funds possibly eliminate the possibility of a rate cut, since the point of a rate cut is to restore lending liquidity?
Rate cuts make money cheaper (helping banks' bottom lines and usually lowering consumer lending rates), whereas, liquidity makes the system run more smoothly (actually, today, "less chaotically" would be the better description. They are two different things.
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