Monday, August 20, 2007

BCA Research on the Credit Crunch

BCA Research is one of the best in the economic forecasting business. Their thoughts today on the current market correction:
"Caution is still in order in the near term, but a concerted policy response should put a floor under risky assets and pave the way for a subsequent rebound. Three key factors underpin our view: 1) the odds of a U.S. recession remain low and the rest of the global economy is strong; 2) the Fed will take additional steps as necessary to stabilize financial markets, with a cut in the Fed funds target rate likely to follow soon, and; 3) markets will respond favorably to a change in Fed policy. Bottom line: markets will remain volatile in the near term, but policy support suggests financial market turmoil should begin to ease in the weeks ahead."

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