Monday, June 05, 2006

June FOMC Meeting

They FOMC will reluctantly raise short term interest rates by another .25% in its June meeting because:

  • It needs to tame inflation (especially asset inflation)
  • Defend a sliding dollar (its at ~1.2950 now)
  • Making sure money keeps flowing to fund US debt
These three reasons to raise rates will trump the 'cooling' economy.