Bernanke speaks, and the markets listen

Thursday, February 14th, 2008

Big Ben opened his big mouth again today, and it seems his outlook on the economy is getting a bit more bearish each time his voice hits the airwaves.

Testifying today at the Senate Banking Committee, he said he now expects “sluggish growth” in the economy but predicted a “somewhat stronger pace” later in the year. He went on to attribute his stronger pace forecast to rate cuts and fiscal stimulus.

He threw in the caveat that housing and labor markets could deteriorate more than anticipated, emphasizing that “downside risks to growth remain.”

It seems that Bernanke is drawing criticism from Washington from both Republicans and Democrats, arguing that the recent efforts …

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Posted in Economics, Finance, Market Trends | 1 Comment »

Failure driven Fed move?

Friday, January 25th, 2008

On Monday the Fed dropped interest rates by a full 0.75% out of the blue. Unprovoked, unannounced, and unexpected, both in scale and timing. Sure, The Street had predicted a rate cut, but no one was predicting three-quarter basis points, and few were predicting an unscheduled cut.

There is something strange about this move.

Big Ben Bernanke has been fairly slow to react to economic data, and has at most taken a half basis-point chunk out of rates at any one time. So why the big bite all of a sudden?

I suspect that there is more to this interest rate …

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Posted in Economics, Finance | 3 Comments »