Fed Raises Target Rate Quarter-Point to 3.75%, Keeps `Measured'

[MaineDem]

Sept. 20 (Bloomberg) -- Federal Reserve policy makers raised the benchmark interest rate for the 11th straight time and signaled they may do so again, saying the U.S. economy faces only a ``near-term'' setback in employment, spending and production after Hurricane Katrina.

The Fed raised the overnight bank lending rate a quarter point to 3.75 percent. ``With underlying inflation expected to be contained, the committee believes that policy accommodation can be removed at a pace that is likely to be measured,'' the central bankers said in a statement after meeting today in Washington.

The increase suggests Fed policy makers aren't convinced that record energy prices after Hurricane Katrina risk derailing the four-year economic expansion. About 20 percent of the 111 economists in a Bloomberg News survey predicted the Fed might skip an increase today.

http://quote.bloomberg.com/apps/news?pid=10000006&sid=a7qtlxY4n0CA&refer=home

[Vincardog]

1. Isn't it grand that they go to such lengths to make sure we never get to

a reasonable employment level? How many people would be willing to put up with a little inflation if they had a good job with raises that were 2% greater than the inflation rate?

The NoeConviction that inflation is the biggest enemy plays right into the Bankers hands. So they send our jobs and factories to the lowest wage countries. They push more and more of us into poverty. They do it to preserve capital at all cost. Their game is playing out and showing itself for what it is. Corrupt Sick and disgusting.
Is this the country you grew up in?

[SlipperySlope]

3. I wouldn't...

How many people would be willing to put up with a little inflation if they had a good job with raises that were 2% greater than the inflation rate?

What is a "little inflation"? Five percent? Twelve percent?

I would not be willing to live with 12% inflation, even if I was "compensated" with 14% a year raises. Inflation is an insidious form of theft, that takes away 12% of everything people try to save. Why even bother trying to save for the future, if everything you put away is constantly falling in value. That seems like a prescription to spend, spend, spend...

For what it is worth, though, the fed is going to fail at their attempt to control inflation. The damage is already done, and no matter what we set rates to, it is going to come back to haunt us.

[Vincardog]

7. Would you rather not have a job? The Federal Reserve is working

to preserve wealth at the expense of working people. They raise rates to slow growth and prevent wages from rising. Their goal is not to prevent 12% inflation it is to have ZERO%. What they are going to get is so much poverty that they have DISinflation. All those piles of money are not going to help when the economy collapses and we head back to the New Dark Age.

[SlipperySlope]

8. Since they've already flushed away 95%, I want 0% inflation.

Given that the Fed has already flushed away 95% of the purchasing power of the dollar since they've been on the job, then yes, I want 0% inflation going forward. It would be nice to hold onto that last 5%.

[Vincardog]

9. Makes you think doesn't it? Their policies have meant zero inflation and a

declining dollar. That is Disinflation. Their policies are not working and are actively hurting the average person. We are experiencing a declining standard of living at the same time they are fighting so hard to fight inflation. It is a Bankrupt policy. Worrying about Inflation when we have a real unemployment rate at about 30$ is lunacy. Inflation is not a concern for the poor and dieing.

[SlipperySlope]

10. No, they haven't mean zero inflation...

Did I type that wrong before?

The Fed's policy has created RAMPANT price inflation. I want 0% inflation, even if it means driving the prime rate to the sky.

I didn't say anything about disinflation or deflation...

[Vincardog]

12. OK you want zero inflation no matter how many people it bankrupts?

Is that it? You value preserving CApital over preserving life?

[SlipperySlope]

13. That is a false choice...

They have already flushed away 95% of the value of capital. During this time they haven't solved any of our nations issues.

At this point, I want the remaining 5% of capital left alone. In fact, I'd prefer it if we went back to a hard currency system and took the ability to manipulate interest rates out of the hands of the fed.

I'll say it again clearly: ZERO PERCENT INFLATION FROM NOW ON, PERIOD.
That is what I want.

[DBoon]

5. inflation = money slowly worth less

If your wealth consisted of piles of money, you'd be opposed to any inflation.

Bankers and financial institutions hate inflation for that reason.

Manufacturers may not mind it, as long as they can raise prices to cover costs. If inflation means more purchasing power, then they may come out ahead.

Owners of non-financial assets make out like bandits. Real estate, gold, collectables see their goodies go up in value without having to lift a finger.

[SlipperySlope]

14. Not quite...

Real estate, gold, collectables see their goodies go up in value without having to lift a finger.

These things don't go up in value. They stay constant in value. It just takes more dollars to equal that value.

[The White Tree]

2. I don't understand.

According to the Fed the U.S. economy faces only a ``near-term'' setback in employment, spending and production after Hurricane Katrina.

Don't these guys meet every month to decide whether to raise the rate. If they expect a short term impact why not offset it by a short term halt in the rate raising policy they are pursuing?

[Tellurian]

4. Scare tactics...

moving Adjustable Rate Mtg holders into a Fixed Rate.

Simultaneously cooling off or slowly deflating the real estate mkts (bubble) ever rising equity position. I guess it's better than completely bursting the equity bubble.

[enigma000]

6. My understanding is the effect is not immediate

I believe a change in interest rates usually takes about 6 months to have an effect on the national economy. Economic decision makers - corporate firms, small businesses, and private individuals take a while to adjust to any changes in money supply/lending capability that occurs with a lowering or raising of interest rates

[Tellurian]

11. That may have been true...

before escalating gasoline prices effectively pinched the consumers pocketbook. After experiencing the ripple effects fuel prices are having on the economy, they no longer want to risk their equity for home additions, vacations or fuel unfriendly cars, against another X-factor developing any time soon.

The rate increase is meant to stimulate HELOC's and ARMS, thereby coaxing them toward refing to fixed rate. Creating another lucrative trend for banks and private lenders over the next 6 months.

[madmark]

15. I do not have a problem with the hawkish stance against inflation

but I would think they would have some ability (or desire)to somewhat discount wage inflation when they factor in the various inflation factors, such as commodity inflation, given that wage inflation has some additional value, ie. Americans are working and making more money. That said, Greenspin will forever be known as a whore for his endorsement of the Bush Budget Wrecking Tax Cut.

[Tellurian]

16. Did you mean?

A whore vs Unemplyed/unemployable/ Dead?

The choice was obvious, as long as the Mrs. continues
to masquerade as the Bush mouthpiece.