Fed Disappoints Wall Street with Small Rate Cut

The stock market plunged yesterday when the Fed announced that it was cutting interest rates by only 0.25%.  Wall street wanted a bigger cut.  In addition, the Fed gave no indication that it was inclined to drop interest rates further, adding to the stock market’s disappointment.

I wasn’t surprised.  The Fed is caught between a rock and a hard place.  It wants to lower rates to head off a recession but needs to keep rates high in order to attract foreign investment needed to off-set our staggering trade deficit. 

Don’t be surprised if the Fed disappoints next month too. 

Pete

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