Housing.com News, Analysis & Opinion: Credit & Debt: What The Fed Fears, Part II

The central bank, which kept interest rates unchanged at its last meeting, still believed the greatest threat to the economy would occur if policymakers did not succeed in reducing inflation pressures. "

But not everyone is drinking the Kool-Aid, specifically St. Louis Fed president William Poole:

Poole said he was content to hold rates steady because the economy appears evenly balanced and the forecast on Wall Street and the Fed generally expects moderate growth around 3% and inflation gradually coming down. "As long as that situation prevails, the current interest rate environment can stay right where it is," Poole said in an interview with Bloomberg Television. Poole downplayed the importance of the Jan. CPI report, saying it would be a mistake to act on the basis on one month's information.

I'm completely in Poole's corner. I realize it terrifies Wall Street to actually have to pay their workers more, but there's no need for a rate hike--or a rate cut--just yet. Let home prices continue to drop and let the subprime market make as dignified an exit as it can, taking the speculators and flippers with them.

Speaking of my favorite topic, it's good to see that Fed governor has her eye on the danger presented by the market's swift collapse, including how it may affect other industries. Uh, actually, I mean to say she is completely wrong:

Bies' remarks played down the risk that mounting problems in the subprime market was having a broader impact on homeowners, which could have serious implications for spending and growth. "I don't think there will be a large impact (from subprime market risks) on the prime mortgage industry. On the fringes there may be some. ... I think it's really in the subprime ARM market, it's isolated at this point," she said.

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"I FEAR NO MAN!" Since the last time we checked in on the collective anxieties of the Federal Reserve, it seems that the course remains set, and the prime concern is still the fear of inflation: The central bank, which kept interest rates unchanged at its last meeting, still believed the greatest threat to the economy would occur if policymakers did not succeed in reducing inflation pressures. " But not everyone is drinking the Kool-Aid, specifically St. Louis Fed president William Poole: Poole said he was content to hold rates steady because the economy appears evenly balanced and the forecast on Wall Street and the Fed generally expects moderate growth around 3% and inflation gradually coming down. "As long as that situation prevails, the current interest rate environment can stay right where it is," Poole said in an interview with Bloomberg Television. Poole downplayed the importance of the Jan. CPI report, saying it would be a mistake to act on the basis on one month's information. I'm completely in Poole's corner. I realize it terrifies Wall Street to actually have to pay their workers more, but there's no need for a rate hike--or a rate cut--just yet. Let home prices continue to drop and let the subprime market make as dignified an exit as it can, taking the speculators and flippers with them. Speaking of my favorite topic, it's good to see that Fed governor has her eye on the danger presented by the market's swift collapse, including how it may affect other industries. Uh, actually, I mean to say she is completely wrong: Bies' remarks played down the risk that mounting problems in the subprime market was having a broader impact on homeowners, which could have serious implications for spending and growth. "I don't think there will be a large impact (from subprime market risks) on the prime mortgage industry. On the fringes there may be some. ... I think it's really in the subprime ARM market, it's isolated at this point," she said. Good to see they've got their eyes on the prize. *sigh*