I Was Wrong, Sort Of

If you've been following this blog, you know that I've long thought the Fed could cut rates without a big risk of inflation. This country has seen much faster rates of growth without inflation and the degree to which inflation is a threat--and I take it seriously--it should be dealt with at its core, like with specific policies aimed at lowering oil prices rather than the blunderbuss weapon of keeping rates high.

And if you've followed the blog, you've also known that I've long predicted the Fed would not make a cut. The severity of the credit crunch of the last few weeks finally prodded the Fed to cut the discount rate last week, a repudiation of the Fed's previous stands. So I'm glad to have been wrong. I wanted a cut and we're starting to get one. It now seems like we'll get the more significant cut in the Federal Funds Rate before much longer. The thing you have to fear now is whether the cut will be enough to soothe the markets and ease the credit crisis. I suspect we're not out of the woods.