Fed 75 bps cut - Neither Chicken Little Nor Bagdad Bob?
Tuesday March 18, 2008
The Fed votes 8-2 to cut the Federal Funds Rate from 3.00% to 2.25%. From the Fed Release:
I am pleased overall - this is likely the best case scenario for those of us who are worried about inflation.
The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to 2-1/4 percent...I am heartened to see that there were no votes for a 100 bps (or more cut), so my fears this morning may have been unfounded. I just never thought I would see the day where a 75 bps cut would be considered the least agressive option.
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.
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.
I am pleased overall - this is likely the best case scenario for those of us who are worried about inflation.


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