> Ian Murray wrote:
>
> >Fed Set to Cut Rates to 45-Year Lows
> >By Glenn Somerville
> >Reuters
> >Tuesday, June 24, 2003; 2:33 AM
> >WASHINGTON - The U.S. Federal Reserve, seeking to rev up a
> >slow recovery
> >while keeping price deflation at bay, is universally expected to cut
> >interest rates to 1958 lows this week.
Ian asks:
> >What was going on in 1958 that necessitated low rates?
Gene:
> A recession.
>
> And they weren't considered that low against the then
> background experience.
also, the inflation rate was low and slowing, so the real rates were relatively high. Going from 1958 to 1959, the CPI rose by only 0.7% (compared to 2.8% between 1957 and 1958).
BTW, this was not a case where deflation was threatened. There wasn't excess capacity around the world, while money wages weren't as flexible as nowadays.
------------------------
Jim Devine jdevine@xxxxxxx & http://bellarmine.lmu.edu/~jdevine
- the Fed, Ian Murray Tue 24 Jun 2003, 21:04 GMT
- Re: the Fed, Eugene Coyle Tue 24 Jun 2003, 21:08 GMT
- Re: the Fed, Doug Henwood Tue 24 Jun 2003, 21:10 GMT
- Re: the Fed, Michael Perelman Tue 24 Jun 2003, 21:18 GMT
- <Possible follow-up(s)>
- Re: the Fed, Devine, James Tue 24 Jun 2003, 21:41 GMT
- Re: the Fed, Michael Hoover Tue 24 Jun 2003, 22:05 GMT
- Re: the Fed, Michael Perelman Tue 24 Jun 2003, 22:13 GMT
- Re: the Fed, Doug Henwood Tue 24 Jun 2003, 23:42 GMT
- Re: the Fed, Michael Perelman Wed 25 Jun 2003, 03:05 GMT