Jeff Osterberg

Did the Fed Cut Too Much?

Everyone is caught in the debate about the current direction the fed should take. However, here's a question... If they are so smart why did they take the rate straight up to 5.25% before "feeling" any of the rate hike effects? Apparently, it's common knowledge that rate changes take 6-9 months to be felt in the economy. With all the extra speculation this was shielded even more until absolute chaos gripped the housing market.
I don't know about anyone else, but in my opinion (no formal economic training but the 101 class I slept through), they should have stopped at 4% and played it by ear.
My point is, if they got it so wrong on the way up, what makes anyone think they'll get it right on the way down!
What did the fed have to loose by pausing at 4%? Nothing, inflaction was incheck at that time.