2:15 is the time today we find out about rates. Expect either no change or a 25 point cut. What in all reality matters more is what is said.
Food and oil prices have risen substantially and even though are not included in the inflation (CPI) measurement, the Fed has noticed. How then can we combat the price increase? Easily. Strengthen the dollar.
How can we strengthen the dollar? Stop the decline in interest rates is the easiest and fastest way. We could also require congress stop running deficits and and actually do something about social security and medicare. But since neither of those is likely to happen anytime soon, we must turn to the Fed.
The last vote to lower rates was an 8-2 and for the first time, the worry over both thedollar and inflation made their way into the discussion. For this reason, one has to think that given the stability is equity prices since the last meeting and the rapid increase in commodity prices during the same time frame, the later must now be given prominence in the decision making process.
The most recent auction for April at the Fed went off at higher rates than the previous one, the first such rise since they began.
Expect the statement to say that the “risks to growth while still present have moderated” and that “commodity prices are of increasing concern”.
Doing nothing here will not hurt growth from an interest rate perspective and will actually help the economy and any strength in the dollar ought to lead to an immediate and perhaps dramatic decline in commodity prices.
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