The financial markets and investors raised their voices and prices in praise of the new Lord of Money in the third quarter of 2006. Fed Chair Ben Bernanke, in his first move independent of the Greenspan legacy, chose to interrupt the two years of “measured” 1/4% increases instituted by his predecessor and keep the Fed Funds rate at 5.25%. Mr. Bernanke’s move was predictive, not predictable. Even though inflation continues to rise in the U.S., “Gentle Ben” decided to look into the future and predict an economic slowing that removed the need to continue the tightening of U.S. monetary policy.
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Canso October 2006 Market Observer
