So after two days of gabbing, the folks on Federal Open Market Committee did what was mostly expected of them and cut the intended Federal Funds rate down to 2%. I really can’t be bothered to come up with something to say about a measly quarter-point rate cut, so I’m going to outsource to my buddy Andy Busch at BMO Capital Markets:
Taken together, the Fed’s actions are disappointing from the standpoint of the US dollar and for dampening commodity prices. Fed is clearly still willing to risk inflation over growth at this point. I think this is a mistake as holding off from cutting would’ve given them room to cut later should they need it and would’ve cooled some commodity inflation. The 8-2 vote shows opposition to the easing remains within the board.
No tough love from Bernanke & Co. yet on inflation nor on the economy. US dollar should get beat up.