Yesterday’s rate cut by the Fed

As was more-or-less expected, if not exactly at that precise moment, the Federal Reserve has cut both the “discount (interest) rate” and its target for the “federal funds (interest) rate.” Most stock markets around the world have reacted with big increases. Does this mean a rising tide for the foreseeable future and beyond? A couple of responses from outside the cheerleader squad.

Dean Baker: ‘…According to much of the coverage, the markets soared yesterday because they are now confident that Bernanke will move aggressively to try to counteract a recession. A bit of history would have been useful to include in this context…’

Jennifer Waters, MarketWatch: ‘…”It will help those who need it the least,” said Richard Hastings, an analyst at Bernard Sands LLC. “But for those who need the most help, this does nothing for them. The Fed cannot help them at all.”…’