Bernanke Is Under Pressure To Signal Rate Cut

http://www.cnbc.com/id/20511439 ^ | 8-30-07

[Hydroshock]

Federal Reserve Chairman Ben Bernanke is under intense pressure to signal a rate cut when he takes center stage Friday at a gathering of central bankers in Jackson Hole, Wyoming. Dennis Cook / AP Federal Reserve Chairman Ben Bernanke --------------------------------------------------------------------------------

In recent days, CEOs, investors and politicians have been clamoring for the Fed chief to move quickly to ease the current credit crunch and keep the economy from sliding into a recession. Although the Fed helped calm the markets on Aug. 17 with a surprise cut in the discount rate, the call now is for a cut in the more important fed funds rate, which has been stuck at 5.25% for more than a year.

"Clearly, the risk of the economy overall going into a recession is heightened right now," complained Ara Hovnanian, the chief executive of homebuilder Hovnanian Enterprises in an interview on CNBC Thursday. "The credit market disarray is real. Clearly a rate cut would be helpful to the overall economy right now."

It's against the backdrop that Bernanke will deliver one of the most closely watched speeches of his chairmanship on Friday.

[edcoil]

He need to do about 8-10 of them.

[Jigajog]

It’s good to see journalism has a firm grasp of the obvious. They must have studied at some Ivy League school.

[Hydroshock]

He needs to do 0 of them at least in Sept.

[NeoCaveman]

I disagree. I think 4 to 5 of them is just right.

If he dallies too long then we might wind up with 8 or 9.

[edcoil]

I expect him to dally so I noted 8-10. Greenspan did what 17 up?

[Moonman62]

I disagree. I think 4 to 5 of them is just right. If he dallies too long then we might wind up with 8 or 9.

You've got it. The longer they wait, the more they'll have to do.

[NeoCaveman]

Yes but 17 was coming from a very small starting point.

I’m calling for 4 to 5 just to put the fed funds rate near the Treasury Bills. I’m not big on economic management, I just believe in following the market.

[Badeye]

There is no reason not to cut the rate. None.

[Always Right]

I disagree. I think 4 to 5 of them is just right. If he dallies too long then we might wind up with 8 or 9.

I agree, the longer the fed drags their feet, the more they will have to do. A few rate cuts right now would do the trick to take us into a strong Holiday season.

[flashbunny]

Cut tax rates, not interest rates.

[Always Right]

There is no reason not to cut the rate. None.

Except for people whom seem to want housing to crash.

[Badeye]

Cut tax rates, not interest rates.

Cut both.

[VegasCowboy]

You've got it. The longer they wait, the more they'll have to do.

I think we are going to hit a point of no return if the Fed doesn't act soon. I don't think people understand the enormity of the problems that will arrise if credit isn't loosened by the early 4th quarter. If you think there are a lot of empty houses on your street now, just wait until the end of this year if there aren't sufficient rate cuts.

[Badeye]

There is no reason not to cut the rate. None.
Except for people whom seem to want housing to crash.

Outside of the Democrats running for the 08 nomination, I don’t know anyone that wants that to happen.

And lowering the rates won’t cause a ‘housing crash’.

[econjack]

Who’da thunk Jackson Hole, Wyoming was a hotbed for monetary policy.

[VegasCowboy]

There is no reason not to cut the rate. None.

Maybe they should raise it then. Let's really stick it to the economy!/sarcasm

[Hydroshock]

If someone is relying on a rate cut to stay in their home then their cances of keeping that home in the long run are slim, I think.

[groanup]

There is no reason not to cut the rate. None.

Except it may reflate the housing bubble.

[Thane_Banquo]

Doubt it. People have already been bitten. I personally think he needs to let a few financial institutions fail to show them the Greenspan Put is no longer in force. They will have to learn to use proper risk management.