Only a calamity would justify an interest-rate cut now, says St. Louis Federal Reserve chief William Poole.
In which case, he either liquidated his personal stock investments before June…or the guy’s got some real hide.
“The daily effective federal funds rate is a volume-weighted average of rates on trades arranged by major brokers,” says the New York Fed. And as you can, it’s slipped sharply below target…closer to the current yield on 10-year Treasuries, in fact.
So why does the US central bank insist in lending fresh cash to the money markets through its open-market operations? The Fed’s put in US$76 billion over the last week, ostensibly to keep the Fed funds rate on target by making money more readily available.
Some US$24 billion of that liquidity was still outstanding yesterday morning, with the latest US$5 billion being auctioned for a repurchase agreement just ahead of today’s open.
Does that make it a calamity yet?
for Markets and Money
Editor’s Note: City correspondent for Markets and Money in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of Gold research at BullionVault – where you can buy gold today vaulted in Zurich.