Wednesday, October 8, 2008

FED CUTS RATES BY 0.50% to 1.5%

Pray all you want!

Joint Statement by Central Banks

Throughout the current financial crisis, central banks have engaged in continuous close consultation and have cooperated in unprecedented joint actions such as the provision of liquidity to reduce strains in financial markets.

Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices. Inflation expectations are diminishing and remain anchored to price stability. The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability.

Some easing of global monetary conditions is therefore warranted. Accordingly, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, Sveriges Riksbank, and the Swiss National Bank are today announcing reductions in policy interest rates. The Bank of Japan expresses its strong support of these policy actions.

Federal Reserve Actions
The Federal Open Market Committee has decided to lower its target for the federal funds rate 50 basis points to 1-1/2 percent. The Committee took this action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures.

Incoming economic data suggest that the pace of economic activity has slowed markedly in recent months. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit. Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation.

The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 1-3/4 percent. In taking this action, the Board approved the request submitted by the Board of Directors of the Federal Reserve Bank of Boston.

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9 comments:

Anonymous said...

think we will hang on to the rally today?

John C. Lee said...

it's very, very questionable. This won't stop the bleeding. Not sure how we're going to sustain the rally when Asia was down 8-10% last night.

Anonymous said...

Totally agree, I was planning to short Financial Ultrashort ETFs at open for the first 30mins. by the way I saw you mention about trend change under your live chat, I was wondering if you can write about it tonight using charts from the pass couple of days as examples so we can be a little more prepare. (I have seen some of the example, but was wondering if you can make a couple more of them so we can study, Thanks John) I think we are asking too much from you, but you have been so accurate on you prediction i can not help myself not to take advantage of this.

John C. Lee said...

i always have a 'today's action' section everyday.

that was a nice size short-lived pop lol that did absolutely nothing. we have some crappy sept retail and general earnings numbers.

lars said...

hey john... because of the intervention today i would like to request an analysis of gold... i'm looking to short it. thanks bro.

John C. Lee said...

any particular tickers?

lars said...

sure just use the GLD tracker... thanks.

John C. Lee said...

well lars,

here's the thing. I like today's action which warrants a short position, but i don't like how it's sitting at the 200-day.

If this gaps down, it should be a short, but only for like 1-2 days unless it breaks the 50-day after that.

there are much better, low-risk shorts than this. I personally wouldn't short it, but that's just my preference.

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