ROFLMAO!!!! first poole, now lacker. cut is on the way.
Volatility no reason for rate cuts, Fed's Lacker says
Marketwatch - August 21, 2007 1:11 PM ET
WASHINGTON (MarketWatch) -- Unless the economy is affected, extreme volatility in financial markets provides no justification for the Federal Reserve to cut its target for the overnight federal funds lending rate, Richmond Federal Reserve Bank President Jeffery Lacker said Tuesday.
"Financial market volatility, in and of itself, does not require a change in the target federal funds rate, in my view," said Lacker in a speech to the Charlotte Risk Management Association.
"Interest-rate policy needs to be guided by the outlook for real spending and inflation. Financial turbulence has the potential to change the assessment of the appropriate rate if it induces a sufficient revision in growth or inflation prospects," he said. Read Lacker's full speech.
Lacker, who doesn't have a vote on the policy-setting Federal Open Market Committee this year, also said he still believes that the nation's economy would be healthy, outside of the housing market.
Financial markets are increasingly persuaded that the FOMC will drop the fed funds rate by a half percentage point at or before the Sept. 18 meeting.
Earlier Tuesday, Senate Banking Committee Chairman Chris Dodd, D-Conn., said Fed Chairman Ben Bernanke told him in a closed-door meeting that the Fed was, in Bernanke's words, "absolutely" ready to use "all available tools" to stem the crisis in the financial markets and to prevent any serious economic downturn.
Dodd, a candidate for the Democratic presidential nomination, said he put no political pressure on Bernanke to cut interest rates further, although he urged the Fed to act quickly to tighten up lending regulations with the aim of preventing predatory and abusive lending. See full story.
Last Friday, the Fed lowered the discount window rate by half a percentage point, to 5.75%.
Treasury Secretary Henry Paulson, who attended the meeting with Dodd and Bernanke, told CNBC earlier that the recent financial turmoil engendered by turmoil in the subprime mortgage market would exact a "toll on economic growth" and that the problems would take time to work out as investors reassessed and repriced risk. |
