As if the weekend events (Lehman Brothers, Merrill Lynch, AIG) weren’t enough excitement for traders, the Fed Open Market Committee handed them another surprise after its meeting Tuesday by holding short-term rates steady instead of cutting the Fed Funds rate as many expected in the wake of the latest financial turmoil.
- Is the Fed gambling that the latest round of financial problems will work themselves out on their own?
- Can the financial system survive another weekend of shocks without further stimulus?
- Did the Fed leave the door open for an interim interest rate cut if market conditions deteriorate?
- Did the latest PPI/CPI figures dampen inflation concerns?
Have a great week!