Fed Expected To Cut Rates By Quarter-Point

The "tail risk" of a deep and protracted recession in the US has not diminished much in recent weeks in spite of the rally in the stock market and improvement in some credit markets, top Federal Reserve officials believe.

This view will probably lead the Fed to cut interest rates by another quarter point (25 basis points) to 2 per cent tomorrow.

The statement is likely to position the US central bank to pause at the following meeting in June, while preserving the option of a further cut at that meeting if required.

The plan to pause should not be mistaken for a signal that the Fed believes the rate-cutting cycle is necessarily over. Rather, policymakers see the case for holding fire while they review economic and market data around the middle of the year.

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Comments

[timothe]

I pulled this quote out of an AP article which was reporting on the stronger dollar, lower gold, and lower oil prices.

"Many people expect tomorrow's rate cut will be the last for some time, so that would alleviate some downward pressure on the dollar and take away from the upward pressure on gold," said Carlos Sanchez, analyst with CPM Group in New York.

Sometimes it's hard to get the facts here, so I wanted to make sure y'all got them.

[browndog2]

Down to 2% arlready. Running out of wiggle room eh boys? I'm digging up all my Canadian pennies and exchanging them for nickels.

[Erdgeist]

A cut of 25 basis point or more is going to drive oil to 200 USD a barrel as well as affect other commodities. Not a very smooth move Fed. Are you guys sure you are economists?

[Veri]

Yes, we are sure that they are economists. And they are also not that stupid. Just playing dumb in front of the cameras. Why would The Fed do that? Public misconception that the situation is completely out of control. If the public thinks they are incompetent, it must be so. Therefore, any harm they do is pure incompetence.

The economists at The Fed do know this will drive inflation. Drop the value of the dollar. Cause consumer prices to go up. Prices, for food, gas, housing, and electronic toys today are the result of The Fed engineering an unsound economic policy under both Republican and Democratic Administrations. The net effect will be negative for the people making under $10 million a year (the new millionaire standard). The Fed does not look out for you, they look out after industry. And, more than occasionally, friends on Wall Street.

The Federal Government has no control over what The Fed does. Hence, the Bear Stearns bailout which came as a complete surprise to Congress. The Fed did not have to inform Congress. This is why they are a private corporation. No government oversight unless you count those dog-and-pony shows on television before Congress.

The value of the dollar will drop. Food will become more expensive. If this continues, you will be able to wipe your ass with the dollar as the toilet paper too expensive to use. Google "Wiemar Republic" and "inflation" for an example of what could happen.

Good luck!

[garbovatwins]

The time is rapidly drawing near for your species to relocate all of your institutions deemed essential to your daily existence away from your coasts. You depend on so much that is located near your oceans. It is not a question of if, but rather when your major coastal cities are permanently under water from your oceans.

[Fairfax]

If this keeps up, the the government will be GIVING money away.

Oh.

Wait.

Never mind.

[FogBelter]

The Fed Continues to Chase the Economic Dragon ... we can guess what that leads to.

[JoeBlough]

Why not just cut the rate to zero and let the magic begin.

[Oldbuck]

I don't care what who ever says the devalued dollar is going to lead to a prolonged recession we in the global market created by those who are defaulting the dollar which will not purchase the goods from say China we are depending on China to finance our debt.

[myshadow]

Great, there goes what's left of the dollar.

[jimmyjones22]

You're telling me! I'm an overseas Us government employee living off-base. That means by the time I cash my check I lose most of my pay. Over the last year, due to the falling dollar, I've lost 25% of my income. In case your wondering, I'm living in Japan.

[TrollDiddy]

Dittos from a non-government worker, expat. I am living in Poland and the dollar has taken an even worse thrashing against the Polish zloty. Soon, I'll have to live in a cardboard box.

[VivaZapata]

the day traders will buy up financials tomorrow and sell them the next day and buy back the commodities that they sold off today and will sell tomorrow. it's all just a shell game to pick up suckers.

[Veri]

Wall Street is a shell game. How much has Wall Street lost over the course of its entire existence, especially for the average American? Go find out. And then, how much has it gained for those who have been in the game for quite awhile?

Wall Street creates virtual wealth using pieces of paper called stock. If the price goes up, wealth is *magically* created. If it goes down? *Magically* destroyed. It is like the banking system where banks are leveraged thirty to one. Or somewhere around there. What does that mean? The banks hold thirty virtual dollars for every dollar the really have.

Imagine everyone trying to withdraw their money at once. A run on the bank. The bank does not have the real money so it must collapse. This is what happened to Bear Stearns before The Fed gave, not loaned, JP Morgan Chase and other investment houses $200 billion or more in taxpayer money. Money the taxpayer is expected to pay back.

Now imagine, that foreign holders of dollars want to turn them in. The dollar can be likened to a bank withdrawal slip. Something must be given, of real value (land, resources, manufactured products) in return for that dollar. Imagine four trillion "bank withdrawal slips" called "Federal Reserve Notes" a.k.a. dollars. Imagine nine trillion. Now imagine forty-five trillion in public and private debt called "dollars". Are you getting the picture?

We are f*cked. All under Democrat and Republican governance.