Fed raises interest rates one-quarter point. Enough? -- robdogdotcom

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Subject: Fed raises interest rates one-quarter point. Enough?

Author:
Rob Dog Bastard

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Date Posted: 11:54:40 06/30/04 Wed

Well - we all knew it was coming and starting today I think we can see the end days of absurdly low interest rates. But, do you guys think the fed is doing enough with a measly 1/4-pt. raise, or is this simply an attempt to give the markets time to adjust before another raise?

Certainly inflationary trends of late have been quite manageable, and most of the inflation has been due to rising energy costs (mostly oil, go figure). Excluding food ang energy, for example, inflation for the last 12 months (ending in May) was only 1.7%. But we're not talking about expendibles here - we're talking about food and energy - two markets which we depend heavily on, and which greatly contribute to inflation in other key areas.

Blah blah blah - we all know (unless you believe the Kerry lies) that the economy is rolling hard right now, and that the future looks bright ahead, but if energy and food prices remain unstable and the worlwide inflationary trends continue their steady march upward, it's quite possible that the fed may make a sudden more drastic increase in lending rates which would shell-shock the markets and significantly dampen the growth we are seeing in our economy.

Most economists agree that the interest rates must go up in order to curb inflation, and that the rates must go higher than they just did. So, why can't the fed enact a precise plan, say 1/4-point every 3 months for the next year. That brings us up to 2.25% - still very low - and it gives the markets the forward notice that they need. Just a thought.

Anybody??

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