Federal Funds Rate Cut To 0.25%

Posted by Bull Bear Trader | 4/30/2008 01:19:00 PM | , | 0 comments »

The Federal Reserve cut the federal funds rate by 0.25% to 2%. The discount rate that banks charge each other was also lowered 0.25% to 2.25%. There were two dissenters who preferred no cut. The bias was basically unchanged, although the analysts are frantically digging into the report to find some change. Apparently the line about downside risk is gone, or at least the word "downside" is gone, but they still mention how pressures exist and economic activity remains weak, with the markets remaining under considerable stress. Amazing how we find one word that is different and then start speculating on whether the Fed is planning to pause or not. I would not be surprised to see the market analysts begin to spin this as a pause, with the Fed now being neutral.

Still early, but the dollar is relatively flat, commodities are relatively unchanged, and the market is confused. Kind of a letdown, at least for traders. Given that the Fed will not meet for another 8 weeks, they may feel they will essentially be pausing for a few months, at which point they may have more clarity. It may take a while to see the full impact on energy, commodities, and the industrials.

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