Tuesday, September 18, 2007
25 basis points are not enough...
In what could be interpreted as a surprising move, Federal Open Market Committee announced lowering of fed funds rate (inter-depository institutions rate) and discount rate by 50 basis points. Helicopter Ben lived upto his reputation. Markets in general expected a cut in interest rates only by 25 basis points. So, markets have been exuberant. As I write this entry, Dow Jones is up by 300+ points. On a day when crude crossed $80 a barrel, will this market excitement be short lived? is the market ignoring the long term inflationary risks?
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