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Fed's Words Of Wisdom: Let It Be

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The Tampa Tribune

Published: November 14, 2007

The head of the Federal Reserve, Ben Bernanke, is right to give no hint that interest rates will be cut again soon.

His position irritated some investors and members of Congress, especially after Bernanke warned that economic activity was going to "slow noticeably" as higher oil prices feed inflation while leaving consumers less money to spend on other things.

Rates may need to be cut again before the current economic turmoil subsides, but the Fed is right to move with caution. Lower rates would undermine the value of the weakening dollar and raise the price of imports.

Futures traders are absolutely certain the Fed will cut rates next month, but Bernanke is right to keep his options open.

The U.S. economy remains strong, despite problems with the mortgage business and real estate. In the third quarter, the economy was growing at a solid rate of 3.9 percent and worker productivity was increasing.

Consumers and Congress must remember that as long as both are spending more than they're making, Bernanke can't make high-value greenbacks appear out of thin air.

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