Karim Basta:

  1. Further cut to gwth outlook
  2. Financial conditions tighter and housing getting worse
  3. Inflation receives greater concern than prior statement
  4. Conclusion: downside risks predominant and ‘timely’ means another intermeeting cut on the table.

Agreed, further comments below:

Release Date: March 18, 2008

For immediate release

The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to 2-1/4 percent.

Could have been 100 as anticipated by the markets. Fed shaded its cut to the low side of the priced in expectations.

Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed

Implies there is still some growth, not negative yet.

and labor markets have softened.

Looking unrevised February payroll number, not the lower unemployment rate. In January they looked at the higher unemployment rate. Unemployment has subsequently gone from 5.0% to 4.9% to 4.8% (rounded).

Financial markets remain under considerable stress,

They went a long way to relieve stress over the weekend.

and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.

Housing starts were revised up, and other indicators indicate it may have bottomed.

Inflation has been elevated, and some indicators of inflation expectations have risen.

This was noted in several Fed intermeeting speeches.

The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization.

They continue to make this projection even after being completely wrong for many meetings.

Still, uncertainty about the inflation outlook has increased.

That’s why – their forecasts have proven unreliable, and crude/food continues to rise as the USD continues to fall.

It will be necessary to continue to monitor inflation developments carefully.

Only ‘monitor’? No action planned.

Today’s policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability.

Intermeeting action is on the table, for both growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred less aggressive action at this meeting.

Wonder how much less aggressive?

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 2-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, and San Francisco.

2 Responses

  1. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization.

    They continue to make this projection even after being completely wrong for many meetings.

    What a conundrum! What has greenspan been saying about all this stuff the past few weeks Warren? I don’t see him on TV anymore or hear mention of him much – how has he dropped out of the limelight?

    Warren either they are stupid or lying, I don’t think they are stupid. So why are they lying? Why not treat the citizenry as adults, tell them lots of people fugged up, and get this over with? Why play silly games and lie like a 2 year old? How does a slowing domestic consumer demand from american shopping machine princess slow down the newly rich middle east shopping machine princess, or newly rich indian shopping machine princess, or newly rich chinese shopping machine princess? All these foreign ladies will want to drive and shop and consume like they have seen Brittney and Paris do over here in the USA, so what if Brittney sits down? If 5 foreign brittney clones pick up her habits, how does that reduce demand for global resources, food, oil etc etc? I don’t understand. Do the fed boys actually think if Paris Hilton sits down here in America that her 50 foreign princess clones overseas will decide to go back to the farm/rice patty life and give up the city life Gza Gza Gabor “green acres” style? LOL! I saw Gza Gza Gabor slap a police man when she didn’t get her spoiled way, all these princesses are gonna have us in a global WW3 when they all can’t have what they want. In the end all their culture, class, and sophistication will leave then and they will be reduced to the lowly materialistic animals they are. They will be slapping each other and ruining their expensive manicures and pulling each others 5K hairdo’s out over that last louis Vitton handbag filled with a few ounces of cocaine! Oh the humanity!

    I have heard speculation that JPM used influence with the FED and others to basically force bear into their waiting hungry arms, that all the banks are so worried about solvency and unmarked level 3 assets that the loan sharks have all turned on each other and eating each other up and pulling whatever dirty tricks it takes to be the eater and not the eaten. Certainly our gubbment can see such extreme times left to greedy/scared Gordon Gekko’s can cause chaotic anarchy, I don’t want that. I want peace and love, not chaos and dirty tricks and lying.

    I am ready for my free mexican built mcmansion and a lifetime of starbucks and brangelina movies and letting howie mandel “deal or no deal” wash over me every day and numb my mind and my problems away. I don’t want to work, think for myself, achieve beyond my fellow citizen, progress science or human knowledge. I just want my 65 years of freebies from the state with all my borg friends. I am going to vote for whichever candidate will take the most taxes from someone like you Warren and give to a bum poor farmer like me for nothing, how are you going to stop me and my fellow bums? (snicker)

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