Is the Fed forced to admit to the fragile nature of the financial markets?
*Bloomberg, by Craig Torres, October 10, 2007:
"St. Louis Fed chief William Poole said in a speech in his bank's
home town that financial markets have stabilized, yet 'have not
returned to normal and are still fragile.'
Boston Fed President Eric Rosengren, in his first speech since taking
office in July, said while 'investors are not reassessing risk in a
wholesale way,' it will likely take 'some time' for them to become more
confident about assessing some types of securities.
Policy makers all concluded it was best to lower their benchmark rate
by half a point to 4.75 percent, double the amount that most economists
forecast, the minutes showed.
Yields on federal funds futures contracts show a 64 percent probability
that Fed officials will leave the benchmark lending rate unchanged at
this month's meeting.
Risks to Economy
'Further actions would depend on how economic prospects were affected
by evolving market developments and by other factors,' according to the
records. Any statement on the balance of risks to the economy 'could
give the mistaken impression that the committee was more certain about
the economic outlook than was in fact the case.'
Fed officials continued to express concern about inflation, citing
labor costs and a weaker dollar, the minutes showed. The currency fell
to a record low of $1.4283 per euro on Oct. 1.
'Inflation risks could be heightened if the dollar were to continue to
depreciate significantly,' the minutes said."
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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