As superheroes go, the Fed looks pretty weak

Economists say Fed is late and rate cuts may not have enough power

By Greg Robb, MarketWatch
Last Update: 11:28 AM ET Jan 23, 2008

WASHINGTON (MarketWatch) -- The Federal Reserve swooped onto the scene Tuesday, flexed its muscles with a surprise rate cut to calm panicky financial markets and flew away promising to return again soon.

But it left behind bystanders more confused than ever about the Bernanke Fed and worried that, as superheroes go, this Fed looks confused and weak.

First of all, the Fed doesn't seem to be such a savvy superhero. For months, it has misjudged the seriousness of the financial market freeze-up and the muscle that it would take to combat it, economists said.

Fed officials dismissed calls for aggressive action with the federal funds rate, and appeared convinced that a half-point rate cut in September, followed by small rate cuts in October and December, was enough to stem the economic weakness.

"They were telling us that the risks were balanced and they didn't need to do more," said James Glassman, economist for JP Morgan Chase

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instead of the general public, this is what you get.