Bond Outlook [by bridport & cie, December 12th 2007]
A month ago we described the Fed’s dilemma in that it has simultaneously to fight inflation and seek to rekindle a faltering economy. This week’s 25 bps cut in the Fed rate showed how a compromise to steer between the two objectives satisfies no one. Inflation is not being checked, and the economy will not be rekindled by somewhat cheaper money (which even the stock markets recognised!). |
Having to cut even by 25 bps must have left Bernanke very dissatisfied too, and feeling the victim of his predecessor’s policies. |
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