Filed under: Economic data, Politics, Housing
If Federal Reserve Chairman Ben Bernanke, as economists surveyed by Bloomberg News expect, cuts interest rates at least twice this year, will the good times start to roll? Not quite.
As BusinessWeek points out, life after the rate cut might not be a bowl of cherries. “The nightmare scenario for the Fed is that it cuts interest rates and only manages to get the markets worried about higher inflation without reviving the economy,” the magazine says. “That’s a recipe for stagflation.”
The impact of the rate cuts on the economy won’t been apparent for about six months, Edward Jones Investment Strategist Alan Skrainka told USA Today, adding that the Fed’s action won’t bail out homeowners who are in danger of losing their homes to foreclosure nor will it make banks more willing to lend.
But the risks of a recession are too large to ignore.
Continue reading A Fed rate cut is no utopia
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