FOMC | stockbee



The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 4-3/4 percent.

Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today’s action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.

Readings on core inflation have improved modestly this year. However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.

Developments in financial markets since the Committee’s last regular meeting have increased the uncertainty surrounding the economic outlook. The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric Rosengren; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 5-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland, St. Louis, Minneapolis, Kansas City, and San Francisco.


Anonymous said...

No Matter which way look at the indices, thats what I call a big move for the indices.

Anonymous said...

My question about the financials is how they repriced the junk loans in the books when they dont know whats in there(maybe they know, not us)too rosy for me,however, i wont argue with the charts or the tape, i just follow Mr Market

Vishal said...

There must be something really BAD in the system that warranted a 50 bps cut. The Fed disregarded inflation & a falling dollar.

F-Trader said...

None of that matters. All that matters is sentiment and where traders put their money. The 50 bp cut probably had to do with the weakened retail number last week as well as the credit markets still being locked.

I wrote a post a few weeks ago saying that if the retail number came in weak, then that significantly raised the odds of a greater than 25 bp cut. Even so, I was surprised yesterday.

shaheem said...

A lot of FED money is tied up in this mortgage market plus elelctions near. This further credit expansion has just been made worse.

market operator said...


You had mentioned an economic forecasting service you monitor that had very accurate predictions. Could you provide the name of that service and perhaps a link?


Pradeep Bonde said...

Economic Cycle Research Institute