Bernanke May Run Low on `Ammunition' for Rates, Balance Sheet

[bicentennial_baby]

March 17 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke may be running out of room to pump money into the financial markets and cut interest rates to rescue the economy.

The Fed has committed as much as 60 percent of the $709 billion in Treasury securities on its balance sheet to providing liquidity and opened the door to more with yesterday's decision to become a lender of last resort for the biggest Wall Street dealers. The central bank has cut short- term rates by 2.25 percentage points since September and will probably reduce them again tomorrow.

``They're using up their ammunition on the liquidity and overnight interest-rate fronts,'' said Lou Crandall, chief economist at Jersey City, New Jersey-based Wrightson ICAP LLC, a unit of ICAP Plc, the world's largest broker for banks and other financial institutions.

Traders today cemented bets that the Fed will cut its benchmark rate by an unprecedented 1 percentage point when policy makers hold their regular meeting tomorrow. Yesterday, in emergency decisions, the Fed lowered the separate rate on direct loans to commercial banks by a quarter-point, to 3.25 percent, and opened up lending at that rate to securities firms.

more: http://www.bloomberg.com/apps/news?pid=20601068&sid=aOv1UfsECliU&refer=economy

[DJ13]

1. ".....and cut interest rates to rescue the economy"

The rate cuts arent being passed on to the consumers anyway.

Despite the reduced rates over the last 6 months banks are actually increasing the interest rates they're charging borrowers.

The banks are increasing their spread merely to boost their sagging profit margins.

The Fed is actually doing our economy MORE DAMAGE by cutting rates, as its increasing our inflation at a rapid rate due to the collapsing dollar and our reliance on imports.

Bernanke would do us all a favor if he ceased cutting interest rates, and used more back door loans to banks to shore up their profit margins.

[bicentennial_baby]

2. I agree

:thumbsup: