Forex Blog: Currency Trading News & Analysis.

June 3rd 2008

Bernanke: No More Rate Cuts

Over the last few weeks, the focal point of discussion surrounding the current US economic crisis has shifted from economic growth to inflation, and commentators are now invoking the stagflation of the 1970’s. Moreover, the Fed is experiencing mounting pressure to show that it is serious about preventing inflation from spiraling out of control. In a move clearly intended to silence critics, Ben Bernanke announced today that the Fed is finished cutting rates, which stand at a four-year low of 2%. No one had seriously expected the Fed to continue loosening its monetary policy. Thus, analysts are debating whether Bernanke was merely stating the obvious or if instead, he is laying the groundwork for rate hikes, perhaps later this year. In his speech, Bernanke also acknoweldged the sagging Dollar, for its role in stoking inflation. The New York Times reports:

The Fed is continuing to ”carefully monitor developments in foreign exchange markets,” he said. After Bernanke’s remarks, the dollar — which has fallen sharply against the euro in the past year — gained some muscle.

Read More: Bernanke Signals More Rate Cuts Are UnlikelyRead More:

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Posted by Adam Kritzer | in Central Banks, US Dollar | No Comments »

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