Bernanke to Cut Rates Further, Faster as Inflation Concerns Ebb
By Craig Torres
Jan. 23 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke has decided inflation concerns have faded enough to let him cut interest rates further and faster to keep the U.S. from tipping world economies into recession.
``Now they are free to move very aggressively,'' said New York University professor Mark Gertler, a research co-author with Bernanke and policy consultant at the New York Fed. ``They want to avoid asset panic. They don't want the declines to disrupt credit flows.''
The Fed's emergency rate cut yesterday signals a dramatic shift by policy makers from inflation to growth concerns. It indicates they now see a risk of lower home and stock values feeding back into tighter credit conditions that threaten to choke off growth, economists said.
A decline in oil prices, lower readings on expected inflation, higher unemployment and slowing factory production all helped convince the consensus-driven Federal Open Market Committee that they could both maximize rate cutting and accelerate the pace.
Futures trading suggests the Fed might follow up with a cut of as much as another half-point Jan. 30, bringing the decrease to 1.25 percentage points in just eight days. Such a reduction, forecast by analysts including Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc., and Dean Maki, managing director at Barclays Capital Inc., would be the deepest since the Fed started using the federal funds rate as its main monetary policy tool around 1990.
more:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aC2iNF0IuwPY&refer=homeInsanity.
Maybe I just don't get it but I just feel this is the worst thing he could be doing. These guys have got to be engineering total economic global destruction. I mean I am sure that is where its heading anyway but this seems like he is jumping out the window head first.
He has chosen inflation -it was that or Market crash, I think. I think he will cut the rates to 0 if he feels like it -just like Japan did. I think he will rather oversee 30% inflation rate rathen than another Black Tuesday -his name would live in infamy if that happened.
Scylla and Charybdis, Rock and the Hard Place...