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Is this the last Fed cut?

Monday, April 28
Posted 9 a.m. Eastern

Is this the Last Fed Cut?

The Federal Open Market Committee meets April 29-30 and by now you’re familiar with the drill — they’ll cut interest rates. But unlike recent Fed meetings that culminated with aggressive moves of the half-point and three-quarter point variety, the upcoming meeting is poised to produce a comparatively small quarter-point cut.

Exactly what will this mean to consumers? Rates for home equity lines of credit and variable rate credit cards will see further declines, though not all borrowers will benefit equally.

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Fed cuts smack savers

Fed not doing savers any favors

Ben Bernanke made it pretty clear last week that the Fed intends to cut interest rates again. A poor employment report this Friday could prompt the Fed to cut rates immediately rather than waiting until the regularly scheduled March 18 meeting. I hope it doesn’t come to that, but an overtone of weakness to this week’s economic data could bring calls from Wall Street for the Fed to do something pronto. As we’ve seen, the Fed has been willing to cave to such pressure.

In addition to Friday’s employment report, tomorrow brings the ISM Services Index. That same index ignited the recession concerns a month ago when it plunged sharply, showing a contraction in the important services sector of the economy. A similarly poor reading this month would bring out the economic boo-birds calling for the monetary policy equivalent of a quarterback change … in other words, an immediate interest rate cut.

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Interest rates dropping faster than presidential candidates

Untitled Document

Interest rates dropping faster than presidential candidates

For the second time in the past 9 days, the Fed aggressively cut interest rates. Today’s move was a half-point cut, which combined with the three-quarter point cut last week brings the fed funds rate to 3 percent, the lowest since June 2005.

After this morning’s release of the fourth-quarter GDP, which showed growth of just 0.6 percent on an annualized after-inflation basis, a half-point move seemed more than likely.

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The week’s economic calendar

Untitled DocumentTuesday, Feb. 19
Posted 6:00 p.m. Eastern

Wednesday releases highlight the week’s economic calendar

In a holiday-shortened week, all of the significant economic releases are squeezed into Wednesday. Starting bright and early at 8:30 a.m., we’ll get the Consumer Price Index, or CPI, housing starts and building permits, all for January. In the afternoon comes the Fed’s meeting minutes from the January get-together.

The Fed minutes might make for interesting reading, for geeks like me anyway, as the meeting came amid two interest rate cuts in a nine-day span. However, don’t expect any revelations, as Bernanke’s appearance before the Senate Banking Committee last week was similarly lacking in nuggets of new information.

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No bombshells from Bernanke

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