SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Booms, Busts, and Recoveries
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: TobagoJack who wrote (34171)5/21/2003 11:59:43 PM
From: elmatador  Read Replies (1) of 74559
 
Alan Greenspan is talking down the importance of recent weak data

Greenspun
Published: May 21 2003 20:15 | Last Updated: May 21 2003 20:15


That Alan Greenspan is talking down the importance of recent weak data, including an accelerated decline in core inflation, adds to the impression that the Federal Reserve's two-part statement on growth and inflation risks reflected a split among its committee members. The Fed chairman avoided the word "deflation" in his prepared testimony on Wednesday, later saying that it was a minor threat, and that the Fed had already taken out insurance with rate cuts to date.

The view that recent weak manufacturing and labour market data are war-tinged remains respectable. Mr Greenspan said that "many more weeks of data will be needed to confidently discern the underlying trends". There are five weeks until the next policy-making meeting.

The market has been pricing in a 25 basis point interest rate cut. That is perhaps best interpreted as a 50 per cent chance of a 50 basis point reduction. Unless the data improve, markedly, the Fed is going to have to act, and a quarter point cut will not help anyone. Mr Greenspan repeated that the Fed was not going to run out of ammunition and that it would start buying longer dated Treasury bonds if needed. The expectation of such is the only way to explain longer-dated yields at historic lows.

The Fed has already been helped by unorthodox monetary policy. If John Snow, Treasury secretary, is not trying to talk the dollar down, he has become remarkably philosophical. Japan will continue intervening and it is already the case that a stronger yen, and a deepening Japanese crisis, are not in America's interests. If the European Central Bank is going to remain in denial then at some point similar calculus will apply to the euro.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News