Fed Caught in A Conundrum

Wednesday, 25 Jun 2008 | 10:20 AM ET

Stocks edged higher ahead of the Federal Reserve's decision today, and CNBC asked the experts whether it would cut, hike or hold interest rates.

Rate Decision in Focus
What to expect from the Fed, with Stuart Hoffman, PNC Financial Services Group; Thomas Higgins, Payden & Rygel and CNBC's Steve Liesman

Rate Decision In Focus

"I think the Fed is going to be sitting on the sidelines for an extended period of time. What they’re hoping, and what we’re hoping, is that the oil market begins to respond to the fundamentals and less to speculation and geopolitical factors."

- Thomas Higgins, Payden & Rygel chief economist

The Fed's Slippery Slope
The consensus suggests the Central Bank will leave rates unchanged, with Brian Belski, Merrill Lynch Investment Strategy Group; Doug Dachille, First Principles Capital Management and Gary Kaminsky, Neuberger Berman

The Fed's Slippery Slope

“Our call at Merrill Lynch is that no change to rates today… and a more hawkish stance from the Fed… We’re a believer in the markets always because we believe that the markets are the ultimate discounting function with respect to what’s going on in the economy.. The Fed has done a great job with what they’re doing in respect to liquidity and other measures. I think what we’re going to see - and at Merrill Lynch, what we think we’re going to see - is more of a standing pat to see what’s going to happen in the summer months and in the fall.”

- Brian Belski, Merrill Lynch chief U.S. sector strategist

Fed Decision Day
Discussing what the Fed will do, with Doug Dachille, First Principles Capital Management and Gary Kaminsky, Neuberger Berman

The Fed's Conundrum

“I think it’s quite a conundrum because basically...the Fed has eased 325 basis points and conditions in the credit markets are tighter than they were 325 basis points ago. And, in addition to that, they’ve actually pumped hundreds of billions of dollars in liquidity, and yet you still can’t get banks to lend to each other, let alone lend to us. So what are raising rates actually going to do? Make credit conditions that much tighter?”

- Doug Dachille, First Principles Capital Management CEO


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