"If we lose confidence in the ability and the willingness of the Fed to deal with inflationary pressures and sustain confidence in the dollar, we'll be in trouble." -Paul Volcker, May 15, 2008
Done deal.
Fed Keeps Rate at 2%, Cites `Upside' Inflation Risks (Update3) : "The Federal Reserve left its benchmark interest rate at 2 percent, ending the most aggressive series of rate cuts in two decades, as higher energy costs threaten to boost inflation."
Forget 'neutral'. This is a weak statement. Full of sound and fury signifying nothing.
"It is more or less a neutral statement, which is consistent with policy on hold pending more clarity," said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. "They are not tipping their hand for the next meeting."
What a bunch of economic girlie-men.
As I said in September 2007, We Need Another Volcker.
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2 comments:
Seems the 1st order of priority for the FED is to protect the well-being and profits of their banking buddies. Screw everyone else.
They keep sitting on their hands, hoping things will get better. But hope is not a good strategy.
By the time they get around to reacting to inflation in the current environment, inflation will be systemic throughout the economy. At that point, they will have a new base line for measurement so will then be able to say that inflation is "moderating" going forward. But prices will not come down to where they were, worker pay will not have increased much, if at all and workers will be in a deeper hole.
Finally, in a belated response, they will be forced to hike rates, further and faster that they would had they acted proactively, causing more market dislocation.
Yes, wimps and "girlie-men" are good description for our FED!
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