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This completely baffles me.
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Re: Rates unchanged! Pretty Surprising!
They are saving their ammunition for something worse than what happened yesterday. Why rush to the zero bound? As far as raising rates, I'm sure they'd like to, but the economy is hardly in any shape to handle that either. Thus, do nothing.Originally posted by Tulpen View Post -
Re: Rates unchanged! Pretty Surprising!
I think they do not want the US$ to fall against other currencies right now. That's why they didn't lower rates.Originally posted by zoog View PostComment
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Re: Rates unchanged! Pretty Surprising!
That was my first thought, too. Waiting not only gives the Fed more options in the future, it avoids the appearance that they are running out of bullets. If they had cut a quarter or a half and the market still tanked they would be seen as impotent. This way they appear powerful, thoughtful and moderate.Originally posted by zoog View Post
With all the money being injected into the system through other means they are also showing that interest rates are not their only tool.Comment
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Re: Rates unchanged! Pretty Surprising!
Why are you baffled? All Is Good (AIG) and going according to the plan. The Fed needs more liquidity shock in order to push more treasuries in the system. This is how Ben's Hammer Drill works ....;)Originally posted by Tulpen View PostComment
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Re: Rates unchanged! Pretty Surprising!
Daily Fed Funds Effective Rate: 2.64 percent (Low 0.01%, High 7%) with 172 basis points of standard deviation
The target rate is doing bugger all right now. Why look like you're panicking when you are in fact powerless?
EJ has addressed this in this post.It's Economics vs Thermodynamics. Thermodynamics wins.Comment
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