VitalAccurateThinking

Fed Takes Pause; Leaves Rate Unchanged

Despite my prediction, the Fed decided to take a break.

With the economy losing momentum, the Federal Reserve halted the longest unbroken stretch of interest rate increases in recent history Tuesday -- a reprieve for millions of borrowers after more than two years of rate pain.

This non-move was trumpeted all week long especially yesterday and today. This leads me to believe the Fed was floating trial balloons to business writers and economists to keep the market stable. Further in the Yahoo article is something I disagree with:

On Wall Street, stocks dropped on worries that the Fed was just taking a temporary break and that more rate increases might be in store.

I say, "no way". The stock market is dropping because the economy is slowing. Had the Fed continued to raise rates, some believe (and I could be persuaded) that the stock market would have dropped even more as the specter of inflation and a slowing economy would be indicated by this move.

My take on all this is we are in a secular bull market that will get progressively more apparent. That is what I think, but what do I know?

posted by Jim VAT @ 5:40 PM