Fed speak - no cut?

[Ivanovich]

I'm curious whether I heard correctly, or I heard only what I wanted to hear. What I think I heard Plosser and Evans say this afternoon was things like

"Markets do not dictate Fed policy."

and

"Cutting rates may stoke inflation"

and

"only more downside evidence would support further cuts -risks remain balanced at present"

This doesn't sound like a Fed ready to cut rates in two weeks. Yet, look right there. Lo' and behold FFIP showing 100% chance of a cut, and a 12% chance of a 50bps cut!

What am I missing that the market isn't?

 

[alientrader]

the fed does not cut rates, they think they do. But it is the market that determines the rates and the fed merely follow it

 

[milehigh_trader]

Quote from alientrader:

the fed does not cut rates, they think they do. But it is the market that determines the rates and the fed merely follow it

ah contrare munfrare!

The fed likes to jiggle the stick sometimes and set the market straight!

 

[RiceRocket]

The fed has no choice but to cut.
No end in sight. That’s the prospect for the credit crisis, which seemed to be on an improving track once the Fed started to ease on August 17. It seemed that the worst was over once the Fed jumped ahead of the curve. The problem is that the Fed came to that same conclusion at the October 30/31 meeting of the FOMC, when the federal funds rate was cut by only 25bps and the statement was “balanced” again. It’s been all downhill since then in the financial markets, as investors quickly concluded that the Fed’s “mission accomplished” message was premature. So now the Fed is back behind the curve and has essentially wasted all that was accomplished from August 17 up until the FOMC tricked us on Halloween.

It is conceivable that some members of the FOMC have concluded that the credit excesses of the past must be wrung out of the financial system even if that causes a recession. So it might be better to save some ammo to revive economic growth after the recession unfolds rather than to try to avert it now. That certainly would be the message if they either don’t cut the federal funds rate or do so by only 25bps on December 11, the financial system’s Day of Infamy. If the Fed really wants to get ahead of the curve, I believe that the FOMC must cut the federal funds rate by at least 50bps as soon as possible given that the financial markets suggest that the current situation is actually worse than it was during mid-August.

 

[paysense]

NOTHING can be accomplished - NOTHING by cutting the Fed Funds rate in December.

And they won't. The market has got it wrong - like they've had it wrong all these months.

Lol

Meanwhile: 4:14[FRE] Freddie Mac late-traded shares halted; last trade at $25.22

People, people, people - learn how to take losses!

 

[Ivanovich]

Rice Rocket, cutting rates at this point does...what exactly? Spike oil through $100? Throw the dollar into the abyss? Does it actually help the mortgage market at all?

Fed's Evans Says Policy Consistent With Risks (Update1)
2007-11-27 15:48 (New York)


(Adds Evans comments in sixth, 10th, 11th paragraphs)

By Craig Torres and Steve Matthews
Nov. 27 (Bloomberg) -- Federal Reserve Bank of Chicago
President Charles Evans said the U.S. central bank has probably
cut interest rates enough for now to calm financial markets and
assure the expansion continues.
``The stance of monetary policy is consistent with
achieving our dual mandate objectives and will help promote
well-functioning financial markets,'' Evans said in the text of
his remarks to the Futures Industry Association in his hometown.
Evans is the second Fed policy maker today to suggest the
U.S. central bank need not cut the benchmark lending rate
further to offset the drag from the worst housing recession in
16 years. Philadelphia Fed President Charles Plosser said in a
speech in Rochester, New York, that further cuts in interest
rates could ``exacerbate'' moral hazard problems and raise
inflation risks.
Fed officials next meet Dec. 11. Futures trading suggests a
quarter point cut in the federal funds rate to 4.25 percent is a
virtual certainty at that meeting, which contrasts with what
some policy makers are saying.
``While the risk is still present of notably weaker-than-
expected overall economic activity, given the policy insurance
we have put in place I don't see this as likely,'' Evans said.
In response to a question about futures markets, Evans said
economic reports so far haven't changed his balanced risk
assessment which the FOMC approved on Oct. 31. ``My own outlook
for the economy must be better than what seems to be embedded in
futures prices,'' Evans said.
Evans voted with the FOMC majority to lower the benchmark
lending rate a quarter-point to 4.5 percent in October.

I don't know, that's pretty clear to me. No cut.

 

[Tracy McGreedy]

According to the fed, there is no inflation. Watch crude oil drop to 80's prior to the fed meeting. The fed will cut rates. Helicopter Ben wouldn't wanna disappoint!!!

Quote from Ivanovich:

I'm curious whether I heard correctly, or I heard only what I wanted to hear. What I think I heard Plosser and Evans say this afternoon was things like

"Markets do not dictate Fed policy."

and

"Cutting rates may stoke inflation"

and

"only more downside evidence would support further cuts -risks remain balanced at present"

This doesn't sound like a Fed ready to cut rates in two weeks. Yet, look right there. Lo' and behold FFIP showing 100% chance of a cut, and a 12% chance of a 50bps cut!

What am I missing that the market isn't?

 

[Ivanovich]

Quote from Tracy McGreedy:

According to the fed, there is no inflation. Watch crude oil drop to 80's prior to the fed meeting. The fed will cut rates. Helicopter Ben wouldn't wanna disappoint!!!

Don't kid yourself. The Fed is fully aware there are inflationary risks.

 

[pumpanddumper]

SO FUCKING GAY with this Fed pump and dump. Yeah, real god damn smart assholes. Let's satisfy and bail this market out again temporaily.

Man, I wish someone would man up and rumor at raising rates.

 

[Arnie]

.25 or .50 pt is isn't going to save the markets. No one knows how to price this shit and no one wants to buy it (yet). As soon as someone (saudi's, Buffet ?) steps up to the plate, confidence will be restored and the markets will recover. I think the Fed doesn't want to be in the position of raising rates while all these loans are re-setting. It's interesting to note that while 10 yr Treas are near record lows, the LIBOR is rising. Nearly all these loans re-set at rates based on the LIBOR.