Bernanke Plays It Safe

Today’s FOMC decision is kind of a dud. They played it pretty much as safe as they could: they cut 25, as everyone was expecting, and they made only very, very slight adjustment to the accompanying statement (FOMC April 30 Press Release).

In fact, the only significant change to the statement appears to be the removal of the sentence “However, downside risks to growth remain” from the policy paragraph. This suggests a slight shift in concern away from economic growth and towards inflation.

Many of the sentences on growth and inflation are identical to the March 18 statement. There is no suggestion of a pause on the horizon that many were looking for.

This doesn’t really provide any fuel for a continuation of the dollar rally/commodity selloff or for more upside in stocks. Markets appear to be essentially unchanged from before the decision.

Comments

[The Jackal:]

Ben the Butcher....this guy needs to be put down. Great, let's weaken the United States Peso even more !!! Doesnt he see that inflation is out of control....the American consumer is hurting !!!! I predict that within five years the Amercian "middle-class" will no longer exist, the only classes will be "rich" and "poor".

2008 Apr 30 03:23 PM

[cjct:]

Ben plays it safe...and accomplishes absolutely nothing.

2008 Apr 30 03:31 PM

[Karl Zachar:]

Why is everyone surprised? The Fed has been telegraphing a 25bps cut forever. Now they did exactly what they implied they would do. What's wrong with that? I think the market traded off at the end of the day because the Fed signaled that they might be done cutting rates. With the FF rate at 2%, is anyone surprised that the Fed has used up rate cutting ability?

2008 Apr 30 04:13 PM

[OptionTrader:]

Check this out cgi.ebay.com/ws/eBayIS...

2008 Apr 30 04:31 PM

[triznix:]

It sounds like they are essentially saying they have no idea what is going to happen and so they are just waiting and seeing before they actually do something.

2008 Apr 30 05:34 PM

[globalmacro:]

The American middle class will not go away because of Fed actions. That is an absolutely insane statement, KFC Financial. The American middle class is being pressured by the rise of the middle class in the rest of the world. The overall increase in people and information flows causes the undereducated, entitled, and lazy American worker to be way overpriced in the global labor markets. Why would I ever hire an American software developer when I can get a better one for less in Vietnam? Does it make sense for a high school educated individual to make $19 an hour as a unionized meat cutter? Of course not. Does it make sense that John Mayer can make ten million dollars in a year? Of course it does. You can't outsource John Mayer to India.

2008 Apr 30 07:09 PM

[icandoitdon:]

does that lazy american worker who can/should be outsourced include the management ranks of the commercial/mortgage/in... banks that decimated their industries and destroyed the financial system through their greed, ignorance and occasional fraud?

if you want to talk about fat, dumb and happy you better include a lot of CEOs on that list.

2008 Apr 30 09:20 PM

[benisanidiot:]

Ben Bernanke has to go

2008 Apr 30 11:52 PM

[the final h...:]

and let us not forget big al greenspan....he's busy selling us out to the camel jockeys.

2008 May 01 07:17 PM