Posted on 10/07/2008 1:13:30 PM PDT by BGHater
Federal Reserve Chairman Ben Bernanke predicted that the global financial markets crisis is likely to restrain the economy well into next year and signaled that the Fed may be getting ready to cut interest rates.
But he said he believes the unprecedented steps taken to have the Treasury Department and the Fed intervene in financial markets were done in time to prevent more expensive and permanent damage to the nation's leading financial institutions.
In a speech before the National Association of Business Economics in Washington on Tuesday, Bernanke said the threat of inflation has receded recently, while the economy has continued to weaken. This could be interpreted as a sign that the central bank might be preparing to lower its key fed funds rate soon.
"Overall, the combination of the incoming data and recent financial developments suggests that the outlook for economic growth has worsened and that the downside risks to growth have increased," he said.
"In light of these developments, the Federal Reserve will need to consider whether the current stance of policy remains appropriate," he added.
The fed funds rate is the primary lever the central bank uses to influence the economy. Lower rates can help reduce the borrowing costs for businesses and consumers on a wide range of loans, including business lines of credit, credit card rates and home equity loans. These cheaper loans can increase economic activity.
But lower rates can also add to inflation pressures since they tend to reduce the value of the dollar and make imported goods, most notably oil, more expensive.
The Fed cut rates seven times between September 2007 and this April, but held them steady at 2% at its past three meetings due to inflation concerns.
(Excerpt) Read more at biz.yahoo.com ...
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And just why did this genius have to state this today and drive the market down 500 points before the Presdiential debate? Inquiring minds want to know...
You think?
This Bernanke isn’t the sharpest knife in the draw.
How about cutting Congress?
How about drilling in ANWR?
How about a Potomac Tea Party?
Forget these stupid rate cuts by the feds - we need a combination of capital gains tax rate cuts, and corporate income tax rate cuts...
We need rate INCREASES. Yeah it’ll suck, but the longer we put this off, the worse it’s going to be and the harder we’re going to fall.
We need the government, at every level to shut up for a couple days and let things settle.
That is insane.
The government needs to stay out of the business of market intervention and manipulation FOREVER. The fed shouldn’t even be manipulating the interest rates, it should be left to the market.
Right, consume consume consume. I forgot.
True story. Too bad it drags us all along with it.
we heard a local economist say he expects stocks to fall to 7500
The Fed should stick to keeping the value of the $. it is congress that needs to work on fiscal policy to help the economy
it is insane only if it not matched by tax cuts and deregulation
Henry Ford, founder of the Ford Motor Company, said:
“It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
http://www.modernhistoryproject.org/mhp/ArticleDisplay.php?Article=FinalWarn02-3#Fiat
people will buy fewer iphones and plasma tv’s. We’ll survive.
Glad I just bought my Iphone a week ago, before we bit the dust!
I hope McCain says it was not a problem with deregulation but with government legislation that caused this financial mess.
I doubt it however.
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