We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Strong Industry Groups - Strong Stocks

 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Sam Raven who started this subject11/9/2001 12:28:06 AM
From: Sam Raven   of 1567
I reviewed the minutes from the October Federal Open Market Committee meeting to look for the differences in my view of the economy that would account for the Federal Reserves more aggressive reduction in interest rates than I expected.

After reading the minutes it appeared my view of the economy was very much in line with what the Federal Reserve was seeing. The difference is that the Federal Reserve Board see deeper cuts in interest rates having a larger short term effect than I believe. Also, I think it is a little short sighted not looking at how much and how fast they are going to have to take back the goodies when the economy turns up. Here is what was said to address this issue: "Monetary policy is a flexible instrument and, with inflation expectations likely to remain relatively benign, policy could be reversed in a timely manner later should stimulative policy measures and the inherent resiliency of the economy begin to foster an unsustainable pace of economic expansion."

I have to assume that, when in coming months, they say they are raising rates to be more inline with economic growth and inflation, the market will be understanding that we were in an unusual situation making interest rates spike unusual amount.

Lastly, when in October they argue that they are decreasing rates more because; "the decline in stock market prices and the widening of risk spreads had damped the stimulative financial effects of the Committee's earlier easing actions" might apply to last October, but not this time around, when the stock market was higher than it was prior to September 11th. Anyway, I will continue to learn.... and provide them my views <g>.

For those interested in reading the Federal Open Market Committee meeting minutes, click on the following link:

Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext