St. Louis Fed President William Poole said Tuesday that the Labor Department's recent employment report implies the economy is not in as much danger as was feared, but conditions remain delicate. On the same day, San Francisco Fed President Janet Yellen said she is uncertain whether further rate cuts will be required to stabilize the economy. "Financial markets appear to be stabilizing, but they have not returned to normal and are still fragile," said Poole, who is a voting member of the FOMC this year. "The substantial upward revisions to data released in the August [jobs] report remind us that it is a mistake to place too much weight on any one report." He cautioned that housing will likely remain weak for several more quarters. Yellen called the Fed's half-percentage-point rate cut in September "prudent" and defended it against the charge of moral hazard. "Investors who misjudged risks will surely suffer losses even if monetary policy is successful in keeping the economy on track," she said. "I don't believe that the Fed should stand aside as a financial shock threatens to derail the economy." Though she believes the rate cut helped to contain downside risk, she said it is too early to tell whether the economy "dodged a bullet." "I have a totally open mind about what, if anything, is going to be needed from here on in," she said.
Sources: MarketWatch I, II, Bloomberg, Reuters I, II, Forbes
Commentary: All Is Not Well In the Labor Market • Something's Fishy About the Jobs Number • S&P 500 Sets Record On Jobs Data
Stocks/ETFs to watch: SPY, QQQQ, DIA
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