Fed Cuts Rates to 2.0%, $ Strengthens, Commodities Sell Off

Posted by Louis Navellier on 4/30/08 12:09 pm

As widely expected, the Fed lowered the fed funds target rate by a quarter percent to 2.00% today, and indicated the cut could be its last in this cycle.  “The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity,” the central bank said in its statement.

Since this could be the last rate cut, the dollar strengthened and several commodities sold off as a result.  Oil plunged another $2 today before recouping some of its losses.

It’s important to point out that if the Fed is done cutting rates (this will depend on incoming data whether the Fed likes it or not), it does not mean the Fed will soon start increasing rates.  The more likely scenario is the Fed keeps short rates at 2% for several months. Watch my Fed Video (filmed 4/16/08).

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