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 Love this market. It is down 270 now, 5 min. from closing. |
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ceo/cfo
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作者：ceo/cfo 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
If it is down like this each day for the rest of the week, the Fed might cut the interest rate on Sept. 18 or sooner as a "policy response."
Fed talked about policy response to market turmoil on Aug. 7
Marketwatch - August 28, 2007
WASHINGTON (MarketWatch) -- Federal Reserve policymakers discussed at their August 7 meeting the possible need for "a policy response" if financial market turmoil continued, according to the minutes of the meeting released Tuesday.
Members agreed a further deterioration in financial conditions "could not be ruled out and, to the extent such a development could have an adverse effect on growth prospects, might require a policy response."
In fact, financial market conditions did worsen, and only ten days later, the FOMC issued another statement, saying that worsening financial conditions had increased the downside risks to growth "appreciably." Read August 17 statement.
At the same time, the Fed cut its little-used discount rate by a half a percentage point to 5.75%. See full story.
But at the August 7 meeting, the members of the Federal Reserve Open Market Committee only agreed to keep a close eye on financial market conditions. They said inflation remained the most significant policy concern and unanimously voted to hold the federal funds rate target steady at 5.25% for the ninth straight meeting. Read August 7 statement.
"FOMC members expected a return to more normal market conditions, but recognized that the process likely would take some time, particularly in markets related to subprime mortgages," the minutes said.
During their meeting, the FOMC members discussed downside risks to the growth outlook from the market turmoil.
They said the adverse developments in the mortgage markets "suggested that the adjustment in the housing sector could well prove to be both deeper and more prolonged than had seemed likely earlier this year."
But there was no sign of disagreement among policymakers that inflation remained the number-one threat.
A lower dollar and poor productivity data contributed to upside risks to inflation, the minutes said.
"The data on core inflation received during the intermeeting period were favorable, but FOMC members believed that the readings for the past few months likely had been damped by transitory factors and did not provide reliable evidence that the recent level would be sustained," the minutes said.
Fed officials said that the strong labor market, growth in income and the export sector would offset the weak housing market and lead to moderate growth in coming months.
Consumer and business spending were expected to continue at a moderate pace, although there was risk that business spending could be trimmed by the turmoil in the corporate credit markets.
However, the Fed staff did trim its growth outlook for the second half of 2007 and 2008 as a result, in part, of the financial market turmoil.
The minutes released today do not include any discussion among Fed officials prior to the Aug. 17 statement.
By cutting the discount rate on Aug. 17 instead of the federal funds rate, the Fed signaled that it believes problems are mainly confined to the financial system, and are not yet impacting the broader economy. The cut in the discount rate provides funds to banks, but does little to change consumer and commercial interest rates, as a cut in the federal funds rate would do.
Despite clamoring from some quarters on Wall Street, the FOMC has not lowered its fed funds target from 5.25%. Many economists believe the FOMC will lower that rate when it meets again on Sept. 18.
作者：ceo/cfo 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 Love this market. It is down 270 now, 5 min. from closing. -- ceo/cfo - (3731 Byte) 2007-8-29 周三, 03:54 (1209 reads)
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