I think AG has acted in precisely the manner he should have during virtually his entire tenure. His job isn't to tell the markets what his exact thoughts are, but rather what his inclinations may be.
Aside from the fact that I think his last increase was a bit overdone, his recent reversal was well-timed. I don't think, based on inflation figures, that a 1/2 point is a good number for him to be shooting for, but rather a 1/4 point.
The slowdown, as "real" as it is (we've seen layoffs before without a real slowdown), is primarily driven by 2 factors: higher energy costs (which interest rates have a lagging effect on...and not much of one, at that), and the dot-com bust and ensuing market meltdown.
The first can't be "managed" per se, though AG has done a good job of doing what he can.
The second has only had a downward shift on the "wealth effect" and brought about lower spending patterns than most firms expected. It has also precipitated layoffs and reduced the "low cost craze" that the internet spurred.
Prices are bound to rise a bit now, and should be aggressively addressed. However, not at the risk of a downward growth spiral. AG is plotting that course very carefully. |
