Fed Faces Complex Decision

Excerpt from Raymond James Economist Dr. Scott Brown's latest economic commentary:

The Fed was justified in cutting short-term interest rates sharply in January and March. The more rapid deterioration in the housing market and troubles in the credit markets had become more significant threats to the economic outlook. However, the increase in oil prices is a completely different problem. The lesson of the 1970s is that the Fed should not accommodate a sharp rise in oil prices. Monetary policy is currently accommodative – hence, all else equal, the Fed would be justified in moving toward a more neutral policy position. The Fed’s decision is complex. As it looks several months out, the Fed has to balance downside risks to growth with a more immediate threat of inflation. It’s an uncertain outlook, to be sure. The Fed will make its decision using a risk management perspective. How it weighs those risks will determine the course of action.

Comments

[iThinkBig]

51% GDP Government and Megacorporations faring OK thus far in 2008
49% Small Business Owners and Service Personell been falling off a
cliff and screaming for blood and feeling the pain since fall of 2007.

Solution: Create many, many new skilled jobs by government subsidies particulalrly in energy and higher education. No asset cushion from the freefall from here, better create one. Oh, never mind, our government wants to continue blessing the irresponsible and crushing the 49%. That 49% is part of the GDP, can't offshore 150 million people of I am sure it would be considered... That said, Washington get your head out of your ass.