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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (2973)	1/18/2001 10:02:49 AM
From: Robert Douglas	Read Replies (2) \| Respond to of 3536

That is why it was OK for AG to hold off a little long on dropping rates, and why he should probably be cautious from here on out. I don't have any issue with the Fed for holding rates as high as they have but I have to disagree that I think they should be cautious from here out. What would be gained from it? If inflation were a problem, I can see the Fed being cautious in dropping rates, but this isn't the case. The real Fed funds rate is way too high for a slowing economy. They could drop the FF rate another 200 bp and still be in the neutral range. And while I don't think that recession is unavoidable at this time, if they keep real rates high for another 6 months they raise the risk considerably. If they wait until they see the whites of the recession's eyes, it will be too late to avoid. If I were in charge at the Fed, I would immediately drop the FF rate 150 bp and raise the margin requirements on stocks.