Reactions to the Surprise Rate Increase by the Fed

Well, that wasn't expected. The Fed recommended that the discount rate rise 25 basis points to 0.75% yesterday and I wonder what the BankInnovation.net intelligentsia (yes, that's you) thinks of Ben's move.

Speaking for myself, I think we'll look back on the rate move yesterday and say it came too late -- just as Greenspan was too slow to the draw in 2004. We're poised to find a veritable boom of credit,

especially with the federal government digging its spurs into the sides of bankers to make more (and more) loans. The entire credit market is about to hit the afterburners again -- and 25 bps is not going to dampen that. Anyone with a 520 credit score looking for an option ARM? Oh, you'll get your approval letter soon enough. Just hang tight.

Coverage:

The Wall Street Journal

The New York Times

Bloomberg

The Federal Reserve's statement

Tags: discount-rate, federal-reserve, fmoc, monetary-policy

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Permalink Reply by Chris Duncan on February 19, 2010 at 4:41pm: Boy, nobody wanted to chime in. History shows that the Fed has almost always reacted way too "late". So I doubt this will be different. Of course for the banks which are hedging such low rate money, they think any change will come too soon. For the savers who are being forced to take on the chin so that Wall St. can still pay its crazy bonuses, the low rates have already lasted way too long.

Sadly, it seems the good guys are the ones who get to pay (as usual). We may be able to take solace when China or Iran controls the world and Wall St. is at least suffering the same fate as Main St. :O)

Gosh, I hate to be so negative on a Friday. I think I'm going to enjoy some more wonderful Olympic stories, where hard work and years of dedication, actually pay off.

Have a great weekend.
cd :O); ▶ Reply to This