Watching inflation or the stock market? That was the question after the FOMC decided to drop both the Fed Funds Rate and the Discount rate by a quarter basis point to 4.5% and 5% respectively.
The move was a little surprising after GDP reports showed a decent 3.9% growth on an annual basis. But credit concerns still predominated as the subprime mess still looms across the economic horizon and a growing economy will be dependent on readily access to cheap loans.
Of course, our export economy is also addicted to the cheap dollar, one of the reasons for the decent GDP figures. No surprise that the lower interest rates pushed a barrel of crude to nearly $100 as the dollar weakened on the news of the Fed decision.
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