Interest Rates: Growth, Inflation and Real Liquidity
Over the next six months, we expect the pattern of interest rates to reflect market expectations of growth, inflation and the provision of liquidity. So what is the outlook for these factors? And is the growth of liquidity less than some perceive? Is Liquidity Really Growing in the Marketplace? Perhaps this is just being “old school” but the perception of helicopter money and liquidity does not appear consistent with the data nor with the actual record of Fed operations. First, the
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Fed’s Three Part Attack: Liquidity Ahead?
On Sunday the Fed announced, first, a cut in the discount rate of 25 basis points to 3.25 percent. This allowed the Fed the flexibility to cut the funds rate 75 basis points at its regularly scheduled meeting tomorrow and still be proactive today. Second, the Fed authorized the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers (note this is more than the traditional bank access) to provide financing to market participants. This
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FOMC Cuts the Funds/Discount Rates: Growth the Goal
Going for Growth—or at least some positive momentum is the goal. Today, the FOMC cut the funds rate by 75 basis points. Our view is that the economy is currently working through the recession. Yet inflation remains above the Fed’s perceived inflation range—note the dissents! Credit issues remain a critical drag on the economic outlook.
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FOMC Cuts the Funds/Discount Rates: Growth the Goal
Going for Growth—or at least some positive momentum is the goal. Today, the FOMC cut the funds rate by 75 basis points. Our view is that the economy is currently working through the recession. Yet inflation remains above the Fed’s perceived inflation range—note the dissents! Credit issues remain a critical drag on the economic outlook.
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