all this hype...the possible Sept. Fed rate cut is already priced in the markets...okay, the cut rates by.25 basis points and market tanks... .50 basis points may give temporary pop...but then back to normal...come on...!!!
Fed Rate Cut already priced in!!!
- Thread starter increasenow
- Start date
So whats your theory on no cut at all?
no cut...equals market tanking as more looming credit concerns continue...
joke?
serious as an egg frying on a phoenix sidewalk in August!!!
S2007S
Registered: Aug 2006
Posts: 4310
08-24-07 09:17 AM
With liquidity drying up over the last few weeks what did the Fed do to pump it back up and inflate an even bigger problem, they cut the discount rate by 50 basis points. Yes its great for the markets in the short term, but one thing you have to understand is that its going to create an even bigger credit bubble. Im sure if liquidty starts to dry up again over the next few weeks that the discount rate will probably be cut another .25-.50 basis points, if this is the case I would expect an even bigger credit bubble. Everyone is cheering these discount rates now, but I dont think they will be cheering when liquidity returns to this market creating another asset bubble somewhere else.
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This may be picky, but to make sure we use the terms and figures correctly since they have been used incorrectly a couple of times in this thread already:
One basis point is equal to 1/100th of a percentage point or .01%.
A .25 basis point cut would mean .0025%. That would move Fed Funds from 5.25 to 5.2475.
One basis point is equal to 1/100th of a percentage point or .01%.
A .25 basis point cut would mean .0025%. That would move Fed Funds from 5.25 to 5.2475.