Search
US: FedWatch
0
0
FOMC meeting outside the regular schedule
Wed, Jan 23 2008, 08:30 GMT
by Luis Arregoces
· The action taken by the FOMC is the more aggressive rate cut, in a single move, since October 1984
· Today’s rate cut is a response to the ongoing deterioration on financial market conditions and credit tightening for some businesses and households
· Risks to the short-term economic outlook are clearly tilted towards the downside
· The Fed’s action was approved with eight votes in favor and one against
The Fed’s emergency interest-rate cut, one week before their scheduled meeting, was aimed at reestablishing investors’ confidence following a week of sizable losses in Wall Street and various markets in Europe and Asia.
Today’s FOMC rate cut is the largest response, in a single move, from the Fed since October 1984. In August 1982, the FOMC decided to cut rates by a full 100 bp as part of a series of cuts aimed to help the economy get out of the long recession that officially started in the third quarter of 1981 and ended in the fourth quarter of 1982.
Equity markets attempted a recovery today, but ended the trading session with small losses. The major indices traded in negative territory before markets closed today. It is the first time since December 1974 that a rate cut of 75 bp does not translate into equity markets’ gains.
The markets are anxiously waiting for the announcement of a fiscal stimulus package. Increasing concerns of a further deterioration in the short-term economic outlook lead the Fed to make a quick action. The rate cut is consistent with a scenario of deterioration of financial market conditions and the Fed is taking measures to help markets return to a stable path; however, monetary policy alone is not enough and a serious fiscal stimulus package is necessary to help revive economic growth.
The downside risks to growth offset the upside risks to inflation. Fed officials indicated that “appreciable downside risks to growth remain” and they “expect inflation to moderate in coming quarters."
The Fed's action was approved with eight votes in favor and one against; William Poole, president of the Federal Reserve Bank of St. Louis objected. The FOMC statement indicated that Mr. Poole objected because he did not believe current conditions justified a rate move before the FOMC regularly scheduled meeting next week.
If economic weakness and the financial turmoil continue, the Fed could lower rates even further in coming meetings.
Published on Wed, Jan 23 2008, 08:42 GMT
Archive
- Fed expects the economy to contract moderately in 2H08 and 1H09
Published On Thu, Nov 20 2008, 10:07 GMT - Fed appears more concerned on economic growth
Published On Thu, Oct 30 2008, 08:48 GMT - FOMC Policy Action October 8
Published On Thu, Oct 9 2008, 07:23 GMT - FOMC Minutes October 7
Published On Wed, Oct 8 2008, 08:00 GMT - FOMC Minutes of August 5th
Published On Thu, Aug 28 2008, 07:31 GMT
BBVA Bancomer
| Av. Universidad 1200 Col. Xoco México 03339 D.F.
http://www.bancomer.com/economica | e.economicos@bbva.bancomer.com
Legal disclaimer and risk disclosure
This document was prepared by Banco Bilbao Vizcaya Argentaria’s (BBVA) Research Department on behalf of itself and its affiliated companies (each a BBVA Group Company) for distribution in the United States and the rest of the world and is provided for information purposes only. The information, opinions, estimates and forecasts contained herein refer to that specific date and are subject to changes without notice due to market fluctuations. The information, opinions, estimates and forecasts contained in this document have been gathered or obtained from public sources believed to be correct by the Company concerning their accuracy, completeness, and/or correctness. This document is not an offer to sell or a solicitation to acquire or dispose of an interest in securities.Interested in forex trading? forex brokerage firms!
FXstreet.com will give you a 3 months membership as soon as minimum rebates have been generated (€150 for private trader/ €300 for corporate trader)
[Read Premium full description]
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.
Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
©2008 "FXstreet.com. The Forex Market" All Rights Reserved.