To avoid recession, Bernanke may be "fool in the shower"

12/10/2007 | Bloomberg

Federal Reserve Chairman Ben S. Bernanke is walking the fine line between assuring markets that the Fed is ready to ride to the rescue and the risk of raising inflation. The Fed is widely expected to lower its benchmark interest rate from 4.5% this week, and Bernanke may have to risk becoming the "fool in the shower" in an analogy attributed to the late Nobel Prize-winning economist Milton Friedman. "The Fed has to assure the markets that it's ready to ride to the rescue and cut rates by as much as necessary," said Lyle Gramley, a former Fed governor.

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