Bernake put & the biggest rate cut in last twenty years! by Milota Sidorova

After a shaky week for the US property market, an emergency U.S. interest rate cut fetched perceptions the Federal Reserve has a bias to it. The situation became worse, when sales of existing homes reached the bottom in last two years in July, and the new home sales fell down 22% on last year. It indicates bad news for the debt laden US consumer. Tuesday Jan 22, US central bank was obliged to make the biggest rate cut in last two decades, after huge losses in stock market on Monday. Morgan Stanley economists Richard Berner and David Grenlaw wrote on Friday, transmitted to Ben Bernake, the current chairman of the central bank, "Disclosures that unwinding of rogue trades also contributed to the weekend meltdown have nurtured perceptions that a new 'Bernanke put' has appeared," According to the Telegraph, there are two possible readings of the Fed's decision, either something unclear in the woodwork, or Wall Street's cheap money addicts had simply been handed one more fix for their catastrophic habit. Still there is a lot of critics by a virtue of Greenspan put, unofficial named according to the last Fed Chairman Alan Greenspan, who maintained the policy of lowering interest rates to help the markets stabilize. Federal Reserve aiming to avoid of an image of bailing out investors and an effort to help markets function smoothly had made firm steps from market turmoil from August. Bernake claimed on a central bank gathering, that it was not the responsibility of the Federal Reserve to protect lenders and investors from the consequences of their financial decisions. "But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy," he quoted Morgan Stanley's Andy Xie continues: "When inflation happens, central bank pampering is supposed to stop - like doting grandparents running out of money. However, a new trick is being discovered to fill the hole. The data-dependent Fed suddenly wants us to ignore current inflation and focus on a future with no inflation."

related story: http://news.yahoo.com/s/nm/20080127/bs_nm/usa_fed_stocks_dc;_ylt=AuTEio74_FqxyU1GrtPHzxas0NUE

by Milota Sidorova for PocketNews (http://pocketnews.tv)

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