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Strategies & Market Trends : The Amateur Traders Corner -- Ignore unavailable to you. Want to Upgrade?

To: Tom Hua who wrote (10456)	6/8/2001 2:43:40 PM
From: $Mogul	Read Replies (1) \| Respond to of 19633

FED TALK: Philadelphia Fed President Santomero, answering questions after his speech today, said it is "premature" to speculate about the June 26/27 FOMC meeting and that it is a "time for reflection" for the Fed, according to Dow Jones. Overdoing it on rate cuts has emerged as a recent theme with some Fed members, with Fed Governor Meyer worrying about the possibility of "overshooting" and Richmond Fed President Broaddus noting that the Fed may be running out of "leeway" to cut rates. Santomero's comments about a time for reflection and his prepared remark that prospects are rising that additional easing risks "boosting economic growth to an unsustainably rapid pace" add to the case. But with the Fed still in an easing stance, based on their latest statement that the balance of risks remains weighted toward economic weakness, it seems unlikely that the Fed would stop to reflect before cutting rates one more time, if "only" by 25 basis points. Recall there were rumors earlier this week (widely dismissed) that the Fed might go to a neutral stance at the June meeting. This too seems unlikely considering the uncertainty in the economic forecast. But another 50 basis point rate cut seems highly unlikely, particulary with Greenspan having the latitude to cut rates between meetings rather than wait another two months until the August meeting. Fed Fund futures reflect no change in easing expectations following today's comments by Santomero, who is not a voting member of the FOMC this year.