Reply #61: Not a strong enough signal that there will likely be no further cuts, [View All]

[Ghost Dog]

as inflation demands, I understand:

US stocks, dollar slip on intereset rate doubts
Wed Apr 30, 2008 4:15pm EDT
NEW YORK, April 30 (Reuters) - U.S. stocks fell on Wednesday after the Federal Reserve cut interest rates but left its next move unclear, causing the dollar to slip and raising the chances of still higher commodity prices ahead.

With an uncertain outlook on interest rates and after U.S. economic data showed the weakest consumer spending since 2001 and reduced business investment, investors locked in profits in stocks, which in April posted the first positive month since October.

The U.S. 30-year Treasury bond <US30YT=RR> traded a full point higher in price as a debt rally gained momentum after the Fed cut its benchmark lending rate to banks one-quarter of a percentage point to 2 percent.

Oil fell $2 a barrel, extending a retreat from a record high this week to more than 5 percent following a U.S. government report that showed crude oil stockpiles rose much more than expected in the world's top energy consumer.

The rate cut by the Fed -- which has now trimmed rates by 3.25 percentage points since September -- had been expected. But Fed policy-makers did not signal a pause in their rate-cutting campaign.

Many economists and analysts worry that the rate cuts will only spur higher inflation down the road and keep commodity prices on the boil, especially if rates are cut more in the future.

"They had such an opportunity to send (commodity) prices tumbling," said Peter Beutel, president of energy consultancy Cameron Hanover in New Canaan, Connecticut.

"Every time they cut rates and leave the door open for another cut, they basically are just giving away the store when it comes to commodity prices," Beutel said.

/... http://www.reuters.com/article/marketsNews/idINN3053781620080430?rpc=44&sp=true