Why has the Fed AGAIN cut the interest rate a quarter point in this self proclaimed "booming" economy?

Question

The reduction in the federal funds rate to 4.25 percent marked the third rate cut in the past three months. Fed officials signaled that further cuts were possible if a severe downturn in housing and a crisis in mortgage lending get worse.
http://news.yahoo.com/s/ap/20071211/ap_on_bi_ge/fed_interest_rates

Answer 1

Come on Chicago, your better than that, you know and I know that it is to jump start the housing markets not the broad base economy, so why try to portray it as the economy is doing poorly when all economic indicators say otherwise. Shame, shame, shame.

Answer 2

It was not "disappointment" that sent the market down. Stocks naturally have the expectations of traders priced into them. Investors, expecting a 50 basis point cut, priced that into the market. Naturally, it fell. A smaller cut by the Fed signals that the economy is going to do better, not worse. Take a look at the economic data. You also might want to try to understand the definition of a recession. That is, two consecutive quarters of negative real GDP growth. That would be extremely unlikely at this point. Real GDP growth (annual rate) for the third quarter this year was 4.9%, up from 3.8% in the second quarter. Those a very healthy numbers. Check the source I listed to see for yourself.

Answer 3

Low interest rates make investments attractive, since the investor can get a low rate....... It's not a bad thing, necessarily. The Fed believes this is the direction to take the market in and I am lacking the economical knowledge to deem the decision good or bad. However, they typically do a good job so I'll take their word for it.

Answer 4

Because there is a tidal wave about to strike the US economy, a lack of liquidity tidal wave. Hundreds of billions of dollars are being lost in mortgage securities because of the collapse of the housing market. Mortgage securities are part of the assets portfolios of all our major banks. The assets portfolios of our major banks is what backs up the value of our Federal Reserve Notes.
As these private banks lose billions in assets, the value of the Federal Reserve Note deminishes. As the Federal Reserve Note declines in value, more and more countries start to dump dollars held in their reserves on the international currency market. The dollar plunges even more.
It's not the economy that is the problem. It's the value of the dollar and the world's willingness to invest in American debt.

Answer 5

they should not have done it the first time -and to do it another 2 is just plain irresponsible -they are giving discount rates because nobody wants to touch the dollar- the party is over for wall street and our politicians have put all of our apples there for a healthy economy -There wont be another bubble or investments in the US for a long long time because the fed continued low rates for way to long and every bank in the world got burned by it -read the link -

Answer 6

It has something to do with foreign influence on the yield curve.

I doubt you know what the yield curve even is.

I doubt you understand what effect lowering the rate has on lending and bank assets.

Why do people know nothing of the topic feel that they are in a position to teach others?

Answer 7

The fed has no idea what is going with the economy. They are totally oblivious and failed to take action when these problems could have been prevented. I feel the dollar will continue to tank and we are destined for recession. Everybody claims that inflation is low, but prices for food and gas are increasing and I have not received a raise in two years. How is this not inflation?

Answer 8

Master Chi : The correct term is "Bombing Economy" ??!!

Regards.

Answer 9

Maybe we just can't appreciate what is really going on because we're "evil liberals."

(And I have no idea whether you're a liberal or not, but since you don't worship the ground Bush walks on... I hope you realize that means you're a liberal whether you want to be or not...)