Tuesday, November 27, 2007

Fed Governor Sounds Slightly More Dovish

The Philly Fed Governor spoke today, and made some comments that sounded slightly more dovish to me:
  • Philadelphia Fed's Plosser says economy to grow more slowly in coming months, despite rate cuts
  • Fed's Plosser says inflation data encouraging, but still a risk
  • Fed's Plosser says would need to adjust rates if economic outlook revised upward
  • Fed'S Plosser says unemployment may rise to about 5 percent next year
  • Fed's Plosser says expects decline in housing activity to bottom out by end of Q2 2008
  • Fed's Plosser says financial problems could lead to more significant spillover
  • Fed's Plosser says rise in oil, commodities prices suggest significant inflation pressures exist
  • Fed's Plosser says rate cuts run risk of higher inflation and inflation expectations

I think the Fed is so behind the curve that they need to do 50 basis points in December. They can't worry about inflation right now. Or maybe their plan is that a US recession would take care of inflation by itself?


At 10:29 PM, Blogger Dave said...

You're right, we should bail out everyone and keep printing money until the dollar isn't worth the paper it's printed on.

What ever happened to financial responsibility? What ever happened to a recession being a *normal* part of the business cycle?

Recessions are normal and depressions aren't. If the fed keeps giving into the pressure and blindly cutting interest rates, we'll end up dealing with a depression and not a recession.

At 11:44 PM, Blogger OT said...

I agree with Dave. With oil at near the 100 dollar level and money being printed like there is no tomorrow, we should let a recession flush out the excess as a 'normal' part of the business cycle.

Has anyone looked at the Mexican peso vs the dollar lately?

At 9:08 AM, Blogger J. Kahn said...

Very few will truly be "bailed out". But the Fed should not let all these financial institutions become insolvent due to a credit crunch. That would not bode well for the integrity of the US financial system.

Leveraged players are already dead in the water. But it will actually help the dollar to promote economic growth in the US.

When the global economy begins to contract, we will have a normal recession. But right now, the Fed needs to preserve the intergrity of our banks, imo.


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