The Fed announced a 25 basis point cut today bringing the Fed Funds rate down to 2%, the lowest level in four years. Overall the Fed admits that “economic activity still remains weak” but they have hopes that the cut will help inflation to moderate over time spurring economic growth.

It came as no surprise to the general public that the Fed cut rates today. (You don’t have to work on the Street to smell another rate cut these days.) However, what did surprise some people though was that the Fed hinted this may be their final rate cut for quite a while. This is even more shocking when you consider that for the past few months the Fed has been on an almost constant chain of rate cutting. I must admit, not everybody was surprised—especially my readers.

If you’re wondering how exactly I can be so convinced that Fed’s rates cuts are over, it’s understandable. The Fed is almost famous for saying a whole lot while truly saying very little. I like to call this little maneuver of theirs “Fed Speak.” That’s right, move over Orwell, I’ve figured out my own way of understanding “Big Brother” Ben. 

Part of today’s Fed statement said:

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

Sure, this sounds like a bunch of mumbo jumbo that’s only pointing out what we all already assumed—the Fed cut to help the economy. However, if you look at it with a trained sense of Fed Speak you’ll notice the key word “substantial.” That term hasn’t been mentioned before, and it’s an indication that the Fed realizes how much they’ve cut so far.

This indication is great news for investors. It’s a cue from the Fed that now’s a great time for investors to get back in the market. Sure, we’re not completely out of the woods yet, (have you seen the prices at the pump lately?!), but we are definitely in a prime position for things to start looking up.  The Fed’s basically done all it can do right now and the next step is in the hands (and wallets) of the consumers. If we all take our tax rebate checks and spend them on investments or new cars then the economy could really perk up. For now the Fed will continue to keep a close eye on the economy, and so will I.

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