To: Richard Mazzarella who wrote (67834 ) 4/19/2001 1:12:56 AM From: Rarebird Read Replies (2) | Respond to Recent public statements by Fed officials and the performance of the equity market had appeared to greatly diminish prospects for any near term rate cut. Moreover, the current price structure at the front end had implied that the market saw virtually no chance of any action before the May 15 FOMC meeting. So, in contrast to the traditional model of signaling its near term policy intentions with some degree of clarity, the Fed appears to be aiming for maximum impact by surprising the market. there was nothing in the statement that signaled an end to the easing regime. This stands in contrast with the pattern sometimes seen during the tightening campaign of 1994. In that environment, the Fed sometimes indicated that, in the wake of an especially aggressive move, they were likely to move to the sidelines for awhile (recall the phrasing "sufficient for now"). investment bust and a negative wealth effect that should dampen consumer spending. wildly bullish for the highly interest rate sensitive gold stocks. another 50 bp ease at the May 15 meeting is very likely. The Yield curve should steepen considerably as the Fed now is seen willing to ease much more aggressively.
