Below is a record of the changing federal funds rate. That’s the rate most publicized on news broadcasts when there is a report about the Federal Reserve Board. It is the interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions. Changes in this rate frequenlty cause the stock markets to react in an extreme manner.
Going back to October 2001 the chart indicates how the Federal Reserve Board has changed rates too often and too steeply. The 5.25% rate was maintained for 10 months. It was reported that the reason was the Fed wanted to fight inflation. Overall inflation from 2005 to 2006 was 3.2% and from 2006 to 2007 was 2.8% (data from the Bureau of Labor Statistics).Now we face the consequences of the Feds focus on inflation. Obviously the radical movement was started during Alan Greenspan’s leadership at the Fed and has continued under the control of Ben Bernanke.Inflation (and deflation) ought to be the major concern of the Federal Reserve. Alan Greenspan voiced concern about this issue almost all the time that he was chairman of the Federal Reserve. Current Federal Reserve Chairman Ben Bernanke also voices the same concerns. The reality seems to be that Wall Street bankers are more of a concern than any other issue. Increasing inflation is obviously is occuring but at the same time Wall Street banks are taking a terrible hit due to their bad judegement in the sub-prime mortgage business. http://apnews.excite.com/article/20080227/D8V2QCCG0.htmlSo who is being bailed out? It certainly is not the average American.
Federal Funds Rate
| Date | Change (Basis Points) Increase Decrease |
Level (Percent) |
|
| 2008 January 30 January 22 |
… … |
50 75 |
3.00 3.50 |
| 2007 December 11 October 31 September 18 August 7 June 28 May 9 March 21 January 31 |
… … … … … … … … |
25 25 50 … … … … … |
4.25 4.50 4.75 5.25 5.25 5.25 5.25 5.25 |
| 2006 December 12 October 25 September 20 August 8 June 29 May 10 March 28 January 31 |
… … … … 25 25 25 25 |
… … … … … … … … |
5.25 5.25 5.25 5.25 5.25 5.00 4.75 4.50 |
| 2005 December 13 November 1 September 20 August 9 June 30 May 3 March 22 February 2 |
25 25 25 25 25 25 25 25 |
… … … … … … … … |
4.25 4.00 3.75 3.50 3.25 3.00 2.75 2.50 |
| 2004 December 14 November 11 September 21 August 11 June 30 |
25 25 25 25 25 |
… … … … … |
2.25 2.00 1.75 1.50 1.25 |
| 2003 June 25 |
… |
25 |
1.00 |
| 2002 November 6 |
… |
50 |
1.25 |
| 2001 December 11 November 6 October 2 |
… |
25 50 50 |
1.75 2.00 2.50 |
Coast Contact 