August 25, 2006

I SMELL AN ELECTION:

Is Bernanke Finally Getting It? (Liz Moyer, 8/25/06, Forbes)

U.S. Federal Reserve Chairman Ben Bernanke may finally be getting it. In his maiden keynote address at Friday’s session of the annual gathering of central bankers and economists in Jackson Hole, Wyo., Bernanke gave barely a hint of his next move on interest rates.

Instead, an end to protectionism was his theme--and a chance at new surges in productivity. By implication, of course, that’s a prescription for restrained inflation and an end to rate increases.


Mr. Bernanke hiked too high for too long just to demonstrate his inflation-fighter bona fides, but he can now start cutting as we head to November.

Posted by Orrin Judd at August 25, 2006 1:39 PM
Comments

He'd better get it, RE is dead in the water at this point.

He need something bold like 1/2% cut.

Could also recommend getting rid of the corp tax.

Posted by: Sandy P at August 25, 2006 4:23 PM

Did the WSJ really say he has to stay the course and not lower rates?

Posted by: Sandy P at August 25, 2006 9:12 PM

Frankly, interest rates can stay the same. RE, right now, needs to have the stupid condo flippers (these guys are the ones overdosing on the ARMs, BTW) kicked out of the market.

Don't worry, Sandy. Liquidating this glut is the best way OJs 100 million new immigrants can get into housing ownership.

Posted by: Brad S at August 25, 2006 10:35 PM

Inflation is still running outside of the Fed's 2-3% comfort zone. And if you believe oil is artificially high then falling oil prices will help stimulate the economy just as interest cuts would.

The Fed may hike 1 more time this year but is probably on hold for the foreseeable future.

Posted by: AWW at August 25, 2006 11:31 PM
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