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Stocks should continue to climb a “Wall of Worry”… The atmosphere has changed dramatically since earlier this year. Individual investors are now fearful. They expect lower stock prices to come, and they fear high valuations. Those fears are both overblown, as I explained yesterday . But another misunderstood market fear is weighing on investors’ minds today… Again, it sounds scary, but it isn’t. It’s just another addition to today’s Wall of Worry. Let me explain… The Federal Reserve just started the process of ending its “easy money” policies… It announced plans to reduce its bond-buying program last month. It has...

The Federal Reserve hiked its benchmark short-term interest rate a quarter percentage point Wednesday and indicated that two more increases are likely in store ahead. The move pushes the funds rate target to 1.75 percent to 2 percent. The rate is closely tied to consumer debt, particularly credit cards, home equity lines of credit and other adjustable-rate instruments. In an unusually terse statement that ran just 320 words, the Federal Open Market Committee changed multiple phrases from its previous missives, pointing to a more optimistic view on economic growth and higher inflation expectations.

Fed study puts ideal interest rate at -5% By Krishna Guha in Washington Published: April 27 2009 03:00 | Last updated: April 27 2009 03:00 The ideal interest rate for the US economy in current conditions would be minus 5 per cent, according to internal analysis prepared for the Federal Reserve's last policy meeting. The analysis was based on a so-called Taylor-rule approach that estimates an appropriate interest rate based on unemployment and inflation. A central bank cannot cut interest rates below zero. However, the staff research suggests the Fed should maintain unconventional policies that provide stimulus roughly equivalent to...

...Yet the conventional wisdom -- on Wall Street and in Washington -- the Fed is "behind the curve" and needs to cut interest rates even faster and further than it has. Never mind that this is precisely the path the Fed has followed since August, yet the crisis has grown worse and now bids to tank the larger economy. Does it make sense to do more of what isn't working? The Fed's main achievement so far has been to stir a global lack of confidence in the greenback. By every available indicator, investors are fleeing the dollar for other currencies...

Despite a strengthening economic expansion, Federal Reserve Chairman Alan Greenspan on Thursday indicated the central bank will remain slow to raise interest rates. In his first extensive remarks on the economy since July, Mr. Greenspan acknowledged growth has "accelerated" in recent months. But he said, unlike the previous half century, inflation, at about 1%, has met the Fed's goal of price stability. As a result, "monetary policy is able to be more patient" than in previous expansions. In his remarks by satellite to the Securities Industry Association, he didn't say interest rates could stay low for a "considerable period." He...

Alan Greenspan's testimony last week sedated the manic bond traders who had the fed funds futures rate — which is often used to predict the central bank's key federal funds rate — running up to 3.5% by year-end. Now the futures market is predicting a 2.75% December funds rate. That's better, but the bond crowd might want to look a little lower.There is a significant likelihood that the fed funds rate — which the Fed has held steady since December at 1.75% — might not rise at all this year. The Fed is going to wait to watch employment...