Faced with another likely dramatic drop on the stock market today (after yesterday’s 500 point plunge by the Dow), the Fed made a rate cut in an emergency move unparalleled since 1982. The Fed rate cut comes ahead of its schedule meeting next week, and did soft-cushion the stock market opening this morning. MarketWatch reports on two different views of the Fed rate cut:
With the move coming just eight days before the next
scheduled meeting, “there can be no doubt that the timing of this
morning’s move is aimed at supporting global financial markets after
yesterday’s global equity meltdown,” wrote Joshua Shapiro, economist
for MFR Inc.
Some traders said the
Fed’s move sniffed of panic. “I think that there’s an element of
thinking that, if the Fed is so worried that it is cutting rates, then
that is feeding into fears that the U.S. economy is in really bad
shape,” said David Page, a strategist at Investec Securities in London.