Agoracom Blog

Will Today’s Fed Move Work? Or Will The US Become Japan 2.0?

Posted by AGORACOM at 5:59 PM on Tuesday, December 16th, 2008

This is the big question of the day.

As you know, the US Fed today established a target range for the federal funds rate of 0 to 0.25%, effectively cutting its key rate for overnight lending to banks by between 0.75% and 1%.

This is the kind of event that history books (ebooks) will be writing about 100 years from now. I’m not going to bother reporting on it, as you can find a great write-up here and here.

Rather, I’d like to provide some meaningful insight from some of the world’s brightest financial minds. Apart from my own 🙂 I’ll continue to update this post throughout the next 24 hours as I scan great bloggers and writers, so make sure to keep checking back.

Mohamed El-Erian, Co-CEO & Co-CIO of PIMCO

Mohamed El-Erian, Co-CEO & Co-CIO of PIMCO was on CNBC today (Fast Money) and, amongst other things, he stated as follows:

Why is this different from Japan? The Fed is acting earlier and more aggressive than Japan’s central bank. In addition, US banks have taken write-downs far earlier than Japanese banks. Nonetheless, he says we still have to be careful about unintended consequences.

….more to come

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