Federal Reserve officials signaled they are now as concerned about a faltering economy as they are about stability in financial markets.
Central bankers anticipated growth that was ``somewhat more sluggish'' than their previous estimate, according to minutes of the Dec. 11 Federal Open Market Committee meeting released yesterday. Policy makers cited weaker consumer spending and the ``deeper and more prolonged'' housing slump.
The remarks suggest the Fed has more incentive to continue reducing interest rates after cutting the benchmark rate by 1 percentage point. Reports since the committee met showed manufacturing shrank last month and new-home sales in November were the worst in 12 years. Until now, the Fed's strategy was aimed at preventing the credit squeeze from hurting the broader economy.
The markets always win! The Fed always lag the markets, that's why they create problems.
Do not agree? Why then did not they avoid the 2000-2002 market debacle and the housing bubble with high interest rates?
Because their human weaknesses in making decisions prevail in spite of all their PhD's at their service.
More on http://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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