The Fed issued an emergency rate cut of 0.75% this morning, a large increment compared to the typical 0.25% adjustments. As U.S. and world markets continue to stall or decline, U.S. Treasury Secretary Henry Paulson displayed a glimmer of optimism, stating that the rate cut is "very constructive" and "shows to this country and the rest of the world that our central bank is nimble and is able to move quickly to respond to market conditions." Paulson asserts that this "should be a confidence builder." Some economists, however, took the opposite perspective, characterized by statements such as those of Insinger de Beaufort's fixed income strategist Marc Ostwald, who contends that "this does everything but shore up confidence and will be seen as a panic reaction."
Does the rate cut show confidence or insecurity? Read more:
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