The Wall Street Journal, in their Marketbeat section posted five reasons why the Fed will cut rates. They are:
- Inflation isn't out of control.
- Market conditions are still problematic.
- The market is expecting it.
- The housing market's troubles warrant it.
- They have little to lose.
In my opinion, the problem lies in #5. Cutting rates will put more downward pressure on the dollar. As I mentioned in my article on the Carry Trade, the impact of a falling dollar is both large and not fully understood. How a falling dollar will impact these positions remains to be seen.
The Fed may indeed cut rates but everyone should realize there is no free lunch and that the law of unintended consequences is always alive and wel
Sponsor Updates and Offers
|
|
|
Related Articles:
Is Cheap Money Era Coming to an End? by PhilR - Jun 20, 2007
Summer Vacation for the Fed by PhilR - Jun 23, 2007
Weak Retail Sales Could Convince Fed to Cut Rates by PhilR - Sep 15, 2007
Protectionism - 2008-2009 Style by JRodgers - Dec 20, 2008
Unintended Consequences of the US Rate Cut by Sam Cass - Sep 19, 2007
Credit Crunch May Prevent Fed from Raising Rates by Sam Cass - Sep 06, 2007
The Fed Cuts Rates by Half a Percent (50 Basis Points) by BestCash Admin - Sep 18, 2007
PIMCOs Bill Gross Sees Federal Funds Rate a 3% by PhilR - Dec 11, 2007.
Summer Vacation for the Fed by PhilR - Jun 23, 2007
Weak Retail Sales Could Convince Fed to Cut Rates by PhilR - Sep 15, 2007
Protectionism - 2008-2009 Style by JRodgers - Dec 20, 2008
Unintended Consequences of the US Rate Cut by Sam Cass - Sep 19, 2007
Credit Crunch May Prevent Fed from Raising Rates by Sam Cass - Sep 06, 2007
The Fed Cuts Rates by Half a Percent (50 Basis Points) by BestCash Admin - Sep 18, 2007
PIMCOs Bill Gross Sees Federal Funds Rate a 3% by PhilR - Dec 11, 2007.
Add to reading list
