Re: Fed Reduces the Fed Funds Rate, What\'s Next?
It sounds like the fed is getting really uncomfortable with the extent that markets seem to be essentially dictating the rate they need to move to. IE, markets have been heavily pricing in cuts and not following suit would cause unwanted disruption (in September I think, rate cut was priced in at 37%, if they only cut 25% then equities would have tanked along with a number of other things, exacerbating the credit crisis).
By saying they're concerned with inflation, they seem to be introducing an element of uncertainty into future decisions and reminding people that some volitility does still exist in the system. Further cuts would not make as much sense if inflation was a concern
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