Fed cuts by 0.75 points, less than market expected

[swag]

Source: MarketWatch

WASHINGTON (MarketWatch) - Stopping short of giving the market everything it wanted, the Federal Reserve cut a key interest rate by three quarters of one percentage point on Tuesday. The Fed action takes the federal funds rate target down to 2.25%, the lowest since December 2004 But the market had expected more. Based on futures trading in Chicago, investor's bets implied a 100% chance of a cut of one percentage point. The Fed did leave the door open. In its statement, the Fed said downside risks remain and it would act in a timely manner if needed. Dallas Fed president Richard Fisher and Philadelphia Fed president Charles Plosser dissented in favor of less aggressive action.

Read more: http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B198C57EA%2D801A%2D4085%2D9F02%2D4F01E5E8E5D8%7D

[aquart]

1. It doesn't work anymore. Hasn't for a looooooong time.

But it's all they know how to do.

So how much will food go up this time?

[hatrack]

2. NOOOOOOOOOO!!!!!!!!!!!! NOOOOOOOOOOOOO!!!!!!!!!! What will Cramer and Kudlow do?

:rofl:

[swag]

7. Speaking of Kudlow, Krugman had this image on his blog yesterday:

[hatrack]

13. Wow. "Delusional" doesn't even come CLOSE . . . .

This is right down there with "Dow 36,000".

:rofl:

[CatholicEdHead]

14. Kudlow will keep pushing for the repeal of all taxes

and in the meantime make the tax cuts permanent, with his usual, "elect a Democrat, go broke" phrases that he uses ad nasum.

[Warpy]

3. It's EXACTLY what the market expected, a full percentage point

between Sunday's 0.25% cut and today's.

Sometimes I wish we could get the lemmings out of the market. It might be driven by more logic than emotion then.

[hatrack]

4. This is the Federal Funds Rate - the .25% was for the Discount Rate

Different mechanisms.

[Robbien]

5. Now the banks can sit on this low cost money to keep propping up their bottom lines

Why bother loaning it out. They make out better if they just sit on the free gift we taxpayers just gave it.

Got to fund CEO bonuses some how.

[Javaman]

6. ahhh, yes, squeeze the middle class. Hope you all enjoy $10 bread.

let's see how long this lasts. I give it two weeks, then the drop once again resumes. Then the $200 bill in loans will be up around that time and there will be another drop.

I'm predicting sub 11K by Memorial Day.

And $4.50 gas around that same time.

It's going to be on long hot summer.

[Virginia Dare]

15. A bad hurricane season in the Gulf..

and more sword rattling by Bush/Cheney in the M.E., shit gas could be up over $5.00 a gallon by the end of summer.

[Javaman]

16. one of the talking puppets on the tv machine stated that it may be 5 bucks

by Labor day.

[deminks]

8. Dow headed south on that one.

http://www.bloomberg.com/index.html?Intro=intro3

Was up 300 ahead of the news, that has at this moment been cut in half.

[swag]

9. It's done shot back up again.

Some must have found that they didn't go for a full point reassuring.

[khaos]

10. the ponzi scheme collapses..

[swag]

11. Here's the press release.

http://www.federalreserve.gov/newsevents/press/monetary/20080318a.htm

Release Date: March 18, 2008

For immediate release

The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to 2-1/4 percent.

Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.

Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.

Today’s policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred less aggressive action at this meeting.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 2-1/2 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, and San Francisco.

[flamingyouth]

12. Ah, the old Invisible Brain theory at work again.

Terrific.

[whistle]

17. Less then market expected??? You mean that Wall Street wanted 0.0% Fed rate?

...A 2.25% Federal rate which commits $400 billion to Investment Banks to bail their asses out for another 45 days in which hide the real problems. These people have received a gift from the Fed of another borrowing cycle until the next audit of their balance sheets which does not take place until June 2008. That buys Wall Street another 90 days to keep the financial shit from hitting the fan and once again these guys get to polish or at least buff up the executive golden parachutes and bonus plans.

[swag]

18. Well, that's one way of looking at it.

[FlyingSquirrel]

19. You know... they can't go lower than 0%

lol

[high density]

20. Unfortunately that's not the case

Ask Japan.

http://money.cnn.com/1998/11/06/economy/japan_bank/

Considering inflation, we're already there really.

[FlyingSquirrel]

21. I had a feeling I was wrong when I posted it

;-)

[high density]

22. I know, but it is a "funny" thing to think about

:)