Speaking of the devil:
Monday July 22, 5:43 pm Eastern Time
Reuters Market News
ANALYSIS-Fed not poised to ease but would if crisis erupts
By Caren Bohan
WASHINGTON, July 22 (Reuters) - Federal Reserve Chairman Alan Greenspan hasn't said a word to suggest he has considered a cut in interest rates should the stock market rout begin to ring loud alarm bells about a double-dip recession.
Cutting rates now would have little effect but would add some gasoline to the fire.
...
Neal Soss, economist at Credit Suisse First Boston, said interest rate cuts by the Fed would not be warranted unless market liquidity seized up severely -- something he doesn't think will happen.
In the aftermath of the Sept. 11 attacks that struck the financial nerve center of the United States, the Fed made it clear it would take what steps were necessary to keep liquidity flowing in the financial system.
"The Fed's job is to be a lender of last resort when the markets are not functioning," Soss said. The markets are functioning well right now, he said but they are not moving in the direction policy makers want them to.
Soss said that points to a problem to be tackled, not by the Fed, but by the administration and Congress.
"If you want to cure the ills that the economy is facing, they are mostly issues for fiscal and regulatory policy, not monetary policy," he said.
Yep.
biz.yahoo.com |
