Why care about the Fed funds rate?
Everyone's busy wondering whether there'll be a cut in the target Fed Funds rate tomorrow, and if so whether it will be 25 or 50 basis points.
The real question should be: will a cut have any effect on the root problem? If banks are bothered about lending to each other on asset-backed commercial paper and the like because they're afraid of huge markdowns when values become clear, does it really matter whether they're lending at 5% or 6%?
The real question should be: will a cut have any effect on the root problem? If banks are bothered about lending to each other on asset-backed commercial paper and the like because they're afraid of huge markdowns when values become clear, does it really matter whether they're lending at 5% or 6%?
posted by econoclast at 1:14 PM
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