On Tuesday, the Federal Reserve Bank lowered its benchmark federal
funds rate by 75 basis points, its sharpest cut in decades. The markets
initially reacted positively to the move, which was intended to shore
up sagging confidence in the economy and financial markets. But the
next day, most of the gains had been lost, as investors feared both
that the recession has already begun and that the Fed is giving up on
fighting inflation to battle the lost cause of the economy. In fact, as
many analysts feel a recession is a foregone conclusion, the focus may
soon turn to inflation, especially given exploding commodity prices and
the sagging dollar. The New York Times reports:
funds rate by 75 basis points, its sharpest cut in decades. The markets
initially reacted positively to the move, which was intended to shore
up sagging confidence in the economy and financial markets. But the
next day, most of the gains had been lost, as investors feared both
that the recession has already begun and that the Fed is giving up on
fighting inflation to battle the lost cause of the economy. In fact, as
many analysts feel a recession is a foregone conclusion, the focus may
soon turn to inflation, especially given exploding commodity prices and
the sagging dollar. The New York Times reports:
"I’m disappointed," said an economist at Citigroup. "It’s not as
if we’re trying to gauge policy priorities on a sunny day. I’d like to
know how you’re going to get inflation in an environment with
suffocating financial restraint and pervasive slowing in demand."
Original post by Jimmy Atkinson and software by Elliott Back
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