Promod Radhakrishnan

Can the Fed Really Afford to Cut Another 50-75 Points?

I agree with your assessment of the current situation - we definitely need a lot of focus on saving the insurers and money center banks. However, once another rate cut takes us to 2.50 or 2.25, the fed will no longer have any leeway in rate reduction as a monetary tool. And given the current situation, i feel just one more rate cut instalment would not do much good. If the Fed instead focuses all attention on what lilguy has mentioned ("find a more direct way to...") and provides rate cuts in spaced out instalments, that might give it more time from a monetary policy stand point. And leave enough room for the market down the year to expect positive monetary policy updates.