masih dalam bentuk aslinya, tapi saya pikir cukup mudah di mengerti, so tidak saya translate ke dalam bahasa indonesia, berikut kutipan beritanya;
WASHINGTON (Thomson Financial) - Federal Open Market Committee (FOMC) members all
but shut the door on easing interest rates in the near future and instead suggest
that the next policy move would be a rate hike, although the timing is uncertain,
according to minutes from its most recent FOMC meeting.
'Although members generally anticipated that the next policy move would likely be
a tightening, the time and extend of any change in policy stance would depend on
evolving economic and financial developments and the implications for the outlook
for economic growth and inflation,' minutes from the August 5 meeting said.
A major factor in the decision would be inflation, which the minutes acknowledged
would stay at elevated levels beyond this year. This seems to run counter to
statements of Fed officials who said inflation could ease as early as this year.
According to the minutes, 'most participants anticipated that core inflation
would edge back down during 2009.'
The minutes added that core PCE inflation would edge up in the second half of
this year, mostly due to a run up in energy and import prices. 'Core inflation
was then expected to edge down in 2009 as the impetus from prior increases in the
prices of imports, energy and other commodities abated and the margin of slack in
resource use widened.'
Many FOMC members said that economic activity 'was likely to remain dampened for
several quarters' and all staff 'expected that real GDP would rise at less than
its potential rate through the first half of next year.' Despite an apparent
boost by the fiscal stimulus package, members see a deceleration in household
spending and softer export demand.
Wednesday, August 27, 2008
Will They, Won't They, Move On Rates?
masih dalam bentuk asli, sekedar untuk menyimpan data pribadi.
Will They, Won't They, Move On Rates? Where the Fed can go from here
Why Move. The historical reason to lower overnight lending rates is to stimulate an economy, relieve the consumer of worrisome debt levels, and to reverse a slow-down in GDP growth forecasts. Since the Fed has a dual mandate (full employment and price stability) it is hard to understand what the recent cuts have achieved. Labor markets are looking weak, consumer confidence is lower, mortgages are higher, GDP growth outlooks have been reduced, and the trade imbalance has not been touched in reality by a weaker dollar.
If cutting rates did not create a stimulus to the economy, in actual fact all it did was to allow global commodities to rip higher off a deflating economy, what will a rate hike achieve? More importantly, who will a rate hike benefit? Rate hikes are spoken of for two reasons; to reduce inflationary pressures, and to contain growth.
Inflation Taming. Inflation has been rampant for years, it has stripped the value of the dollar to shreds in real terms, and as such the question that Anthony Tillman, Trade Director at The-LFB-Forex asks may be more pertinent; "Why did the Fed wait for so long before actually cutting interest rates? Instead of a savage 325 basis point cut that included emergency action over closed door weekends, why did the Fed not follow their previous policy of instigating sooner runs of 25 basis point moves each month?”. Tillman added “A set of smaller, earlier, controlled cuts, would have created an environment where the interbank may have actually trusted the fact that things were stable enough to lend, and therefore the balance sheets deficits may have been able to have been traded towards some kind of respectable loss, instead of being frozen. In that case the cuts may have actually found their way towards the consumer as well, if the consumer actually was the intended target that is. We would still have achieved the same goal of 2.00% rates eventually, but may have done it without seeing commodities, and therefore inflation, explode”.
Loses and Greed Punished. The natural consequence of the credit crisis has been to see losses and greed lead to closures and redundancies, as many believe that they should have. But what was a level playing field that credit markets had created via the Treasury not pushing and enforcing regulatory standards, suddenly became a field that had bumps and pot holes to play on, and any amount of “Cheap Money via rate cuts” then needed to be used to fill the holes, and not therefore put to work. Maybe there is no blame to apportion; maybe the markets are paying the price of feeding too long at an overflowing trough of easy credit. And maybe, just maybe, with new regulatory standards in place, the same mistakes will not happen again.
Excuses Last Year. The Fed’s reason for not cutting in smaller increments and for not starting the rate cuts sooner? (Honestly, these are the reason given through 2007);
We have inflationary pressures in commodities (Oil was at $80 then, it went to $145).
We have wage inflation pressures (The weekly jobless average has gone from 320k to 450k, and incomes had declined).
We have strong GDP growth through 2008/9 (Huh? Where was that figure coming from?).
We have a stable overall environment (Well up until that sunny day in July 2007 that the S&P rating agency announced that LDO and CDO debt was toxic. THAT would have been the time to get the ball rolling on rate cuts, and many were publicly amazed that it did not happen).
Copious Debt. It is no wonder that bond traders are looking for rate cuts and balance sheet renewals, but it is also a wonder as to how the Fed will justify raising rates with little GDP growth, and 11.5 months of unsold homes sitting on the market. The U.S. consumer is not consuming at 2.00% rates; the credit lines are frozen. They definitely will not get access to credit with higher overnight rates. The U.S. requires copious amounts of debt to be flowing around the markets and the economy, and right now that is just not happening.
Staus Quo. Maybe it is as good a time as any to just leave things alone, and let the market sort itself out. There will be pain, there will be bank failures, there will be fear, but if this is not sorted out and changes made the next boom and bust cycle will be with us before Mr Bernanke can say “Jack Robinson”.
Will They, Won't They, Move On Rates? Where the Fed can go from here
Why Move. The historical reason to lower overnight lending rates is to stimulate an economy, relieve the consumer of worrisome debt levels, and to reverse a slow-down in GDP growth forecasts. Since the Fed has a dual mandate (full employment and price stability) it is hard to understand what the recent cuts have achieved. Labor markets are looking weak, consumer confidence is lower, mortgages are higher, GDP growth outlooks have been reduced, and the trade imbalance has not been touched in reality by a weaker dollar.
If cutting rates did not create a stimulus to the economy, in actual fact all it did was to allow global commodities to rip higher off a deflating economy, what will a rate hike achieve? More importantly, who will a rate hike benefit? Rate hikes are spoken of for two reasons; to reduce inflationary pressures, and to contain growth.
Inflation Taming. Inflation has been rampant for years, it has stripped the value of the dollar to shreds in real terms, and as such the question that Anthony Tillman, Trade Director at The-LFB-Forex asks may be more pertinent; "Why did the Fed wait for so long before actually cutting interest rates? Instead of a savage 325 basis point cut that included emergency action over closed door weekends, why did the Fed not follow their previous policy of instigating sooner runs of 25 basis point moves each month?”. Tillman added “A set of smaller, earlier, controlled cuts, would have created an environment where the interbank may have actually trusted the fact that things were stable enough to lend, and therefore the balance sheets deficits may have been able to have been traded towards some kind of respectable loss, instead of being frozen. In that case the cuts may have actually found their way towards the consumer as well, if the consumer actually was the intended target that is. We would still have achieved the same goal of 2.00% rates eventually, but may have done it without seeing commodities, and therefore inflation, explode”.
Loses and Greed Punished. The natural consequence of the credit crisis has been to see losses and greed lead to closures and redundancies, as many believe that they should have. But what was a level playing field that credit markets had created via the Treasury not pushing and enforcing regulatory standards, suddenly became a field that had bumps and pot holes to play on, and any amount of “Cheap Money via rate cuts” then needed to be used to fill the holes, and not therefore put to work. Maybe there is no blame to apportion; maybe the markets are paying the price of feeding too long at an overflowing trough of easy credit. And maybe, just maybe, with new regulatory standards in place, the same mistakes will not happen again.
Excuses Last Year. The Fed’s reason for not cutting in smaller increments and for not starting the rate cuts sooner? (Honestly, these are the reason given through 2007);
We have inflationary pressures in commodities (Oil was at $80 then, it went to $145).
We have wage inflation pressures (The weekly jobless average has gone from 320k to 450k, and incomes had declined).
We have strong GDP growth through 2008/9 (Huh? Where was that figure coming from?).
We have a stable overall environment (Well up until that sunny day in July 2007 that the S&P rating agency announced that LDO and CDO debt was toxic. THAT would have been the time to get the ball rolling on rate cuts, and many were publicly amazed that it did not happen).
Copious Debt. It is no wonder that bond traders are looking for rate cuts and balance sheet renewals, but it is also a wonder as to how the Fed will justify raising rates with little GDP growth, and 11.5 months of unsold homes sitting on the market. The U.S. consumer is not consuming at 2.00% rates; the credit lines are frozen. They definitely will not get access to credit with higher overnight rates. The U.S. requires copious amounts of debt to be flowing around the markets and the economy, and right now that is just not happening.
Staus Quo. Maybe it is as good a time as any to just leave things alone, and let the market sort itself out. There will be pain, there will be bank failures, there will be fear, but if this is not sorted out and changes made the next boom and bust cycle will be with us before Mr Bernanke can say “Jack Robinson”.
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