What was the Fed thinking?

You wonder what the Fed was thinking with this recent 1/2 point rate reduction. If their primary goal is to control inflation, they must feel it is under control then I guess the powers that be in the Fed have not personally been in a grocery store or bought gas recently.

I know they say we have to exclude "volatile food and energy" sectors from the inflation equation, but that is like not noticing the elephant in your living room. Both food and energy impact inflation pressure and price rises filter through the whole economy. e.g. Food transportation costs rise with gas prices so food price increase. Also, the rest of the world is buying more agricultural products so even with farm production methods improving, the demand is greater than the supply and food prices rise again.

Reducing the discount rate only adds to inflationary pressure and will make the Feds job harder, down the road. Remember the 12 percent plus inflation rates of the '80's? Also, those citizens who depend on money market savings accounts will have their income reduced and spend less, further restricting demand.

Their whole purpose for this reduction is to prop up the financial industry's losses and helping those institutions which caused the mortgage meltdown by providing loans based on thin air to begin with. How sad!