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Credit Worries Ease as Fed Cuts, Hints at More Relief

Wall Street Journal Original article ›

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The Fed cuts rates by three quarters of a percentage point to 2.25%, but cautions about inflation expectations. The increasing inflation and the fears of a steep fall in the value of the dollar, and the knowledge that liquidity is hardly the root of the problem considering that opaqueness of mortgage securities and not knowing who owns the bad ones is the source of the confusion in markets, will limit what the Fed can do from now on. The focus should be shifting to reduce the loan burden on homeowners at risk of foreclosures so that they can make payments on smaller principal for longer periods with better terms with Government backing the softer terms and the Bush administration is gradually coming around to the view that its announced voluntary loan improvements are not enough to meet this crisis which is just beginning to heat up.


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