Federal Reserve Chairman Ben Bernanke, Alan Greenspan's replacement, yesterday announced that the "Fed" is entering the New Year with plans to aggresively cut interest rates.
Bernanke said that the Federal Reserve board has decided that avoiding a recession is a much greater worry that containing inflation.
Many Fed Watchers believe that at the next meeting of the FOMC... the Federal Open Market Committee... which meets about every six weeks... will drop interest rates by a full one-half percent instead of the "baby step" cuts of one-quarter percent that have been seen over the past fiscal quarter.
Many people who in the past criticized Alan Greenspan's approach to interest rates, have come full circle and have been coming down even harder on Bernanke. As much as many wished that Greenspan would retire earlier than he did... many of those same "Fed watchers" have wished that Greenspan was still at the helm of the Federal Reserve Board.
In hoping to stimulate the economy, Bernanke uttered words in the usual "Fed-speak" language that "additional 'policy easing' may well be necessary." What a comedian this Bernanke guy is !
The Fed has it's own language. Instead of using the nasty R word... recession... the Fed and many economists prefer to use their own term. They would rather say that the economy has been experiencing a period of "negative growth." Negative Growth ? Uh huh. Yes, Ben. Yes Mr Bernanke.
Several economists have been grousing recently that the Fed needs to be more Pro-Active than the reactive mode they have been in. With the recent news of higher unemployment, the chances of a rate drop has increased marketly. Whenever the jobless rate rises, inflation worries usually lessen.
Steps are being taken to turn the economy around. If my memory serves me right, the Government currently in power during an election year really does not want a recession economy. As Bill Clinton said in past elections... "It's The Economy, Stupid."
So... take heart everyone... there just may be some relief coming a bit sooner than many of us had previously thought ! And for us... the sooner it happens... the better.
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