Oct 22 2007
The Upcoming Fed Meeting
I don’t understand why the press cannot understand that the Fed only changes the discount rate, nothing else. The Fed Funds Rate is determined by supply and demand, not dictated by the Fed itself, as this story in the Wall Street Journal suggests. It’s frustrating to me as a teacher. No wonder our students are confused!
Will the Fed cut rates on Halloween? That’s what it’s signaling now and Bernanke has made a point of being predictable. Wall Street seems to be salivating for the cut after the housing crunch and a slow summer, but the futures markets have dropped the expectation of a rate cut from 90% down to about 33% according to BusinessWeek.
How is the economy REALLY doing? Not even the Fed seems to know. Bernanke recently told reporters that assessing the economy was a “formidable challenge.” No news to students of economics in that.
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