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Bernanke Signals Further Rate Cuts

 
TruthSeeker7
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02/27/2008 10:49 PM
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Bernanke Signals Further Rate Cuts
The Fed chairman's testimony to Congress indicated that concerns about a slowing economy still outweigh inflation worries

By Action Economics, S&P MarketScope, and BW staff

With the Federal Reserve trying to navigate a challenging course between slowing growth and rising inflation, the central bank's chairman tried to address the twin dilemmas in his semiannual monetary policy testimony before Congress on Feb. 27. The verdict from Fed watchers: Fed Chief Ben Bernanke steered his testimony toward the "dovish" side, placing greater emphasis on the central bank's need to shore up economic growth via monetary policy.

Indeed, Bernanke clearly left the door open for further Fed easing as he noted that downside risks to growth remain the main threat, reports Action Economics. While his testimony featured several paragraphs on inflation, he concluded that the Fed will be "carefully evaluating incoming information…and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks."
Fed Remains Focused on Growth

The term "adequate" is a major departure from the use of "substantive" when Fed officials presaged their January rate cuts, says Action, and "this suggests to us a less aggressive policy course, at least in March, unless we get a big downside surprise in the employment report."

"[T]here was no indication of a more hawkish message in response to signs of a buildup in inflation pressures," wrote Morgan Stanley (MS) economist David Greenlaw in a Feb. 27 note. "Instead, the Fed remains primarily focused on the downside risks confronting the economy and is leaving the door wide open for as much additional easing as is necessary to support growth."

Bernanke reiterated the downside risks to the economy, noting that the economic situation has become "distinctly" less favorable since July's Monetary Policy Report.
Keeping an Eye on Inflation

In noting inflation risks, Bernanke said the "further increases in the prices of energy and other commodities in recent weeks, together with the latest data on consumer prices, suggest slightly greater upside risks to the projections of both overall and core inflation than we saw last month." Bernanke said an increase in inflationary risks could complicate the central bank's ability to continue cutting borrowing costs to help underpin economic growth.

Bernanke acknowledged there may be some pass-through of energy costs to core consumer prices. But the core consumer price index is still expected to come in at a 2.1% rate this year. The key assumption, he indicated, is that energy and food prices would begin to flatten out, which so far has not been the case. That could lead to an "unmooring of inflation expectations"—some erosion in the Fed's inflation-fighting credibility—complicating the task of sustaining price stability and reducing the Fed's flexibility.

As for near-term policy, he said the Fed will need to judge whether the rate cuts to date are having the intended impact, and that the policy stance must be determined in light of the medium-term outlook, where downside risks remain.

Commenting on monetary policy, Bernanke said a critical task for the Federal Reserve over the course of this year will be "to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives of maximum employment and price stability in an environment of downside risks to growth, stressed financial conditions, and inflation pressures."

"In particular, the FOMC will need to judge whether the policy actions taken thus far are having their intended effects. Monetary policy works with a lag. Therefore, our policy stance must be determined in light of the medium-term forecast for real activity and inflation as well as the risks to that forecast."
Expect a 50-Basis-Point Cut

As for other key challenges to the U.S. economy, Bernanke said a lingering housing market slump and a related credit squeeze sweeping the financial markets were continuing to pressure the economy, resulting in a "distinctly less favorable" economic situation. Bernanke said economic growth had "slowed sharply" during the fourth quarter of 2007 and said the country's job market had "similarly softened."

"Although the words stagflation and recession appear nowhere in Bernanke's testimony, the discussion of downside risks to the growth outlook and upside risks to a higher inflation outlook have both a stagflationary and potentially recessionary feel about them," wrote Bear Stearns (BSC) economist John Ryding in a Feb. 27 note. "With the Fed in a growth risk management mode, we continue to look for a 50-basis-point rate cut on Mar. 18 (which is more than fully priced in after this testimony) and for two further quarter-point insurance rate cuts in April and June, putting the funds rate at 2% by midyear."

"The absence of an expression of stepped-up concern regarding inflation risks can presumably be interpreted as validation of the market's expectation of a [half-percentage-point] rate cut at the Mar. 18 FOMC meeting," said Morgan Stanley's Greenlaw.

But while Ryding, Greenlaw, and other economists believe the Fed will cut rates by 50 basis points on Mar. 18, Action Economics believes it's not clear that aggressive easing will be forthcoming at the March policy meeting. Action expects a quarter-point cut in the Fed funds rate target, to 2.75%, on Mar. 18.

[link to www.businessweek.com]
astrolabe
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02/27/2008 11:01 PM
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Re: Bernanke Signals Further Rate Cuts
bump Kiss the dollar & the U.S. economy good-by.
TruthSeeker7 (OP)

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02/27/2008 11:06 PM
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Re: Bernanke Signals Further Rate Cuts
byekitty
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02/27/2008 11:09 PM
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Re: Bernanke Signals Further Rate Cuts
my...god....what does this mean...?
Anonymous Coward
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02/27/2008 11:15 PM
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TruthSeeker7 (OP)

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02/27/2008 11:15 PM
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Re: Bernanke Signals Further Rate Cuts
I think we need an animated pic of a sinking ship.

Anybody got one?
Anonymous Coward
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02/27/2008 11:16 PM
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Re: Bernanke Signals Further Rate Cuts
unreal

toast
 Quoting: ^TrInItY^


yes.

I watched a portion of broadcast.
Ron Paul made some very good points which actually made Bernanke's voice tremble. It looked like he was going to cry he was so nervous.

Ron Paul mentioned the M3 numbers and how completely out of wack the currency is. He really opened up the whole sham that the FED is perpetuating.

Everyone else there just made the usual silly comments./
TruthSeeker7 (OP)

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02/27/2008 11:19 PM
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Re: Bernanke Signals Further Rate Cuts
unreal

toast


yes.

I watched a portion of broadcast.
Ron Paul made some very good points which actually made Bernanke's voice tremble. It looked like he was going to cry he was so nervous.

Ron Paul mentioned the M3 numbers and how completely out of wack the currency is. He really opened up the whole sham that the FED is perpetuating.

Everyone else there just made the usual silly comments./
 Quoting: Anonymous Coward 232837


Ron is the only one with a friggin' clue.
Anonymous Coward
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02/27/2008 11:21 PM
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Re: Bernanke Signals Further Rate Cuts
unreal

toast


yes.

I watched a portion of broadcast.
Ron Paul made some very good points which actually made Bernanke's voice tremble. It looked like he was going to cry he was so nervous.

Ron Paul mentioned the M3 numbers and how completely out of wack the currency is. He really opened up the whole sham that the FED is perpetuating.

Everyone else there just made the usual silly comments./


Ron is the only one with a friggin' clue.
 Quoting: TruthSeeker7



It was amazing to watch everyone else there...it's like looking at zombie's. Saying pleasant words that have no meaning. Like they're possessed or something.
Anonymous Coward
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02/27/2008 11:23 PM
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Re: Bernanke Signals Further Rate Cuts
What exactly does this mean?

More inflation?
TruthSeeker7 (OP)

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02/27/2008 11:24 PM
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Re: Bernanke Signals Further Rate Cuts
unreal

toast


yes.

I watched a portion of broadcast.
Ron Paul made some very good points which actually made Bernanke's voice tremble. It looked like he was going to cry he was so nervous.

Ron Paul mentioned the M3 numbers and how completely out of wack the currency is. He really opened up the whole sham that the FED is perpetuating.

Everyone else there just made the usual silly comments./


Ron is the only one with a friggin' clue.



It was amazing to watch everyone else there...it's like looking at zombie's. Saying pleasant words that have no meaning. Like they're possessed or something.
 Quoting: Anonymous Coward 232837


Is there a YouTube video of this? I'd love to see that.

I remember last time Ron Paul addressed Bernanke.

Quite an amazing video...

TruthSeeker7 (OP)

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02/27/2008 11:29 PM
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Re: Bernanke Signals Further Rate Cuts
Actually, this is the video I was thinking of:

TruthSeeker7 (OP)

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02/27/2008 11:48 PM
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Re: Bernanke Signals Further Rate Cuts
unreal

toast


yes.

I watched a portion of broadcast.
Ron Paul made some very good points which actually made Bernanke's voice tremble. It looked like he was going to cry he was so nervous.

Ron Paul mentioned the M3 numbers and how completely out of wack the currency is. He really opened up the whole sham that the FED is perpetuating.

Everyone else there just made the usual silly comments./
 Quoting: Anonymous Coward 232837


This is probably a part of what you were watching:

"Ron Paul is the smartest Man in the room and gets Helicopter Ben to admit he is right."

Added: February 27, 2008



Bernanke's voice does appeared to quiver some. Not strong, calm and confident. Clearly shaken. And, he admits Ron Paul is right.
Anonymous Coward
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02/27/2008 11:51 PM
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Re: Bernanke Signals Further Rate Cuts
What a classic! "The falling dollar won't hurt Americans unless they are buying imported good."

The real question is, why would a person who is intelligent enough to be FED Reserve Chairman make such a pinhead statement.

If anyone can find today's, Ron Paul made BB admit that inflation is a problem.
TruthSeeker7 (OP)

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02/27/2008 11:57 PM
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Re: Bernanke Signals Further Rate Cuts
What a classic! "The falling dollar won't hurt Americans unless they are buying imported good."

The real question is, why would a person who is intelligent enough to be FED Reserve Chairman make such a pinhead statement.

If anyone can find today's, Ron Paul made BB admit that inflation is a problem.
 Quoting: Anonymous Coward 378959


I don't see that video, but here's a REAL CLASSIC!!!

LOL!!!!



HILARIOUS!!!

Five Stars on this one!
TEXAS UNCENSORED
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02/28/2008 02:37 AM
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Re: Bernanke Signals Further Rate Cuts
His ass, it won't hurt us. Anybody totaled up how much more, percentage, that everything has gone up ?

Stupid is as stupid does. How do we the people go about firing this crook ?
NatashaRyker

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02/28/2008 03:09 AM
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Re: Bernanke Signals Further Rate Cuts

He who controls the past controls the future, and he who controls the present controls the past. -1984
Anonymous Coward
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02/28/2008 03:14 AM
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Re: Bernanke Signals Further Rate Cuts
bump Kiss the dollar & the U.S. economy good-by.
 Quoting: astrolabe 382020


Buy gold, children, as the hyperinflation of lower interest rates will drive gold higher.

BUY gold and silver!!!!
TruthSeeker7 (OP)

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02/28/2008 04:21 AM
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Re: Bernanke Signals Further Rate Cuts
bump Kiss the dollar & the U.S. economy good-by.


Buy gold, children, as the hyperinflation of lower interest rates will drive gold higher.

BUY gold and silver!!!!
 Quoting: Anonymous Coward 225509


TIRXF

My shares up 25% since Jan. 29.

You'd pay the Daily Reckoning folks around $2,000 for that tip.

Has land with 17 VMS deposits. Even 1 can make a mining stock skyrocket. 17 is unheard of.

Enjoy hf
Anonymous Coward
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02/28/2008 07:41 AM
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Re: Bernanke Signals Further Rate Cuts
The one video was made in Spring 06 and the words "stagflation" are used and here we are almost 2 full years later. Its even truer now than before.
Anonymous Coward
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02/28/2008 08:43 AM
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Re: Bernanke Signals Further Rate Cuts
wriggle wriggle squirm squirm.

What are you turning yourselves into, one wonders? Worm food, perhaps?

I don't know, healthy humans provided better organs. What fuel does their ships use? Or are 'The Bird People' here again and wanting to dine from a higher density?

Why were they your Gods?

Egypt was taken with a single, female beheading in 1784BC. You will be made to recognise.

Ankh in Night, ON.
Anonymous Coward
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02/28/2008 08:45 AM
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Re: Bernanke Signals Further Rate Cuts
Because the Pyramid's significant chamber predated Thoth. He just did not figure out how to use it, because he was afraid of The Guardians, as his tablet recounts.

GDS.
Anonymous Coward
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02/28/2008 08:46 AM
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Re: Bernanke Signals Further Rate Cuts
Rick Santelli going off on CNBC about FED doing all the wrong things--Same guy argued with Cramer weeks ago. INFLATION is not to be taken lightly. Fucking FED is gonna kill the middle class. At least there are some people on the tube that will speak up--Lou Dobbs is another. Poor sheeple.
Anonymous Coward
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02/28/2008 08:49 AM
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Re: Bernanke Signals Further Rate Cuts
[link to finance.yahoo.com]


Fucking pink sheets --what the fuck are u pumpin dik4
Anonymous Coward
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02/28/2008 11:51 AM
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Re: Bernanke Signals Further Rate Cuts
What exactly does this mean?

More inflation?
 Quoting: Anonymous Coward 380870

'IT' Means MARTIAL LAW !!!
Economic Collapse ~ THINK ABOUT IT!

You can't pay? YOU GO 'AWAY!'

HOLEEE CRAP PEEPS, DOOM DOOM DOOM ~ DOOM!
Isaac Brock died for us

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02/28/2008 01:02 PM
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Re: Bernanke Signals Further Rate Cuts
What a classic! "The falling dollar won't hurt Americans unless they are buying imported good."

 Quoting: Anonymous Coward 378959

Or goods that are priced by the world market.

Exxon is not going to give you a special deal on Texas crude, just because you are American. The farmers who fill their tractors with Exxon diesel are not going to give you a special deal on wheat.
And the coal mines and uranium mines that supply your power plants are not giving out special deals either. Everyone sells at world prices.

Bernanke is lying and he knows he is lying and he knows that we know. The mark of a psychopath.
owner of an extensive collection of curios from the exotic orient
Anonymous Coward
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02/28/2008 01:14 PM
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Re: Bernanke Signals Further Rate Cuts
unreal

toast


yes.

I watched a portion of broadcast.
Ron Paul made some very good points which actually made Bernanke's voice tremble. It looked like he was going to cry he was so nervous.

Ron Paul mentioned the M3 numbers and how completely out of wack the currency is. He really opened up the whole sham that the FED is perpetuating.

Everyone else there just made the usual silly comments./


This is probably a part of what you were watching:

"Ron Paul is the smartest Man in the room and gets Helicopter Ben to admit he is right."

Added: February 27, 2008



Bernanke's voice does appeared to quiver some. Not strong, calm and confident. Clearly shaken. And, he admits Ron Paul is right.
 Quoting: TruthSeeker7


Note Bernanke's comment on the price of oil, at the end of video (if the price of oil goes up, inflation will rise).
All indicators are pointing to the price of oil going up this year, I mean seriously does ANYONE think it's going to remain stable or go down???????????????

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