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To: Yorikke who wrote (2992)	2/9/2001 3:40:35 PM
From: Robert Douglas	Read Replies (3) \| Respond to of 3536

I take exception to this notion that the Fed is somehow accommodative because they have eased 100 bp. To me, the amount they have eased is immaterial. What is important is the level of rates in relation to growth and inflation. Since growth, according to Greenspan's Senate testimony, is "near zero" and inflation is no more than 3% and likely 2 1/2%, why do we need a 5 1/2% FF rate? That equates to a 2 1/2 to 3% real FF rate, which by almost any definition is restrictive. They seem to value their methodical, cautious reputation more than they value the health of the economy. What is the point in not cutting immediately to where the rate level is stimulative and wait and see what happens? If they overdo it, they can always adjust upward at a later date.