My Two Cents

Dollar Coordination

Chris Farrell Mar 17, 2008

We know that the Federal Reserve will cut its benchmark interest rate this week, perhaps by as much as percentage point. That would bring its rate down to 2%.

One genuine and growing risk is that a rate cut by the Fed will send the dollar cascading lower. That’s why I expect (or perhaps more accurately hope) that we will see a coordinated and concerted action among central bankers and Treasuries around the world to prop up the value of the dollar.

What we don’t need is a financial catastrophe sparked by a sudden run on the greenback.

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