Let’s see if the credit markets take this warning seriously. From Bloomberg:
Federal Reserve Bank of Dallas President Richard W. Fisher said investors shouldn’t assume the Fed will keep up the recent pace of interest-rate cuts.
“We reacted with very deliberate actions” in January, said Fisher in an interview with Bloomberg Television in Paris. “That shouldn’t lead markets to expectations that we will continue to react in that manner.”
Fed officials have cut their benchmark rate by 2.25 percentage points since August, taking it to 3 percent. The 1.25 percentage point of reductions in January was the fastest easing of policy in two decades.
Fisher also downplayed speculation that the Fed is set to hold an emergency meeting after a recent rise in credit costs.
“I would discourage you from thinking that simply because of a significant action in the credit markets, like we had yesterday, that suddenly we’re going to have an Open Market Committee meeting, and that suddenly we’re going to move Fed funds rates in response,” said Fisher. “It doesn’t work that way.”