The markets always win

(Bloomberg) -- Federal Reserve officials signaled the central bank will keep lowering interest rates because financial markets remain distressed even after the fastest reduction of borrowing costs in two decades.

Fed Chairman Ben S. Bernanke told lawmakers yesterday that the central bank is ``ready to respond to whatever situation evolves,'' and cited ``considerable stress'' in markets. New York Fed President Timothy Geithner said policy makers must ``continue to act forcefully.''

The weak economy (not the Fed) has forced the rate of 13-week Treasury bills down to 1.34%. The Fed target rate is still 2.25%. It is still too high relative to market rates. It will have to come down to 1.5%.

The markets always win!

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George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977