Fed Cuts After All

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NEW YORK: The U.S. economy didn't need a rate cut -- but Alan Greenspan figured the rest of the world still did. "This wasn't aimed at the domestic economy," TIME senior economics correspondent Bernard Baumohl says of the Fed chairman's decision to cut short-term interest rates a quarter point for the third consecutive time. "This was an international cut." At home, unemployment is still low and economic fundamentals are still strong -- and foremost for the Fed chairman, inflation remains under control.

"There's no way Greenspan would do this if he was still worried about that," says Baumohl. "He obviously thinks the U.S. can absorb another rate cut without overheating." Asia and its fellow patients, however, evidently needed another cash injection. Japan and Brazil have both embarked on huge government-led recovery programs, and their currencies could use the boost that a U.S. cut provides. And when the Fed cuts, says Baumohl, "the central banks in Europe will likely cut too." You're welcome.