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A Rate Hike This Week? Maybe Yes, Maybe No
Posted: 08/12/09
By: tomgrisafi
The Federal Reserve most likely won't be delivering any rate hikes at its meeting this week, but it can deliver something many investors are looking for: hope.
As Wall Street seeks to hold on to a stunning 50 percent rally off its March lows, the Federal Reserve's take on the economy's strength and what looms ahead will be watched closely. The Fed will be releasing its statement Wednesday at 2:15 pm after concluding its two-day meeting.
"Right now we're at another phase, the stabilization phase. It's an inflection point," said Quincy Krosby, general market strategist at Prudential Financial Services. "The one thing the Fed does not want to do is abort the recovery."
Some gentle words of encouragement could help rejuvenate a market that has pulled back over the past several trading days due to profit-taking and concerns about the economy's strength.
"Are they going to say that growth is gangbusters? No, they're not going to say that," Krosby said. "But they must acknowledge that we have moved into a more stable situation."
Source: Reuters, CNBC
2 Comments
Guest
Posted: 08/12/09
Hiking the central bank's key lending rate from its current target of zero to 0.25 percent indeed would be one way the Fed could put the brakes on the current rally. Great if you're short :)
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Guest
Posted: 08/12/09
BUT... the economy itself continues to show conflicting signs. While the unemployment rate has taken a mild downturn, most economists think the slight dip was only temporary and joblessness will rise more before it falls.