As mentioned in previous posts, the Fed has been walking a tightrope between providing sufficient liquidity to support economic growth during a time of distress in some sectors of the economy, notably housing, while also keeping inflation in hand. This got a bit easier yesterday, when inflation data was surprisingly low in the United States, meaning the Fed can hold off on raising rates while still keeping a close eye on economic growth and inflation.
According to Lehman's Drew Matus (cited in today's FT):
"The inflation numbers give the Fed more breathing room. This gives them a little more time to wait and see and let things develop."
In a related story, going to graduate school in London just got a bit more expensive. The dollar is now trading 2 to 1 against the pound. Ouch!
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