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Academics
January 22, 2008

St. Francis Professors Offer Comments on Surprise Fed Rate Cut

St. Francis College Professor and Chairman of the Management Department Dr. John Dilyard and Economics Professor Dr. Behrouz Tabrizi offer these comments on the Federal Reserve Rate Cut on January 22, 2008:

"The Fed's 75 basis point reduction in both the fed funds rate and the discount rate, the largest such reduction since 1990, was done primarily to calm investor fears that financial markets in the US and abroad were on a prolonged and dangerous downward spiral, and that economic growth could be deteriorating toward a recession. The cut, done a week before the Federal Open Market Committee was scheduled to meet, comes on the heels of massive sell-offs in global financial markets and a nearly 500 point decline in the Dow Jones Index. The cut also emphatically demonstrated the Fed's willingness to act decisively and quickly when conditions warrant."

"In addition to instilling confidence, the rate cut could be a signal that more action needs to be taken to provide a stimulus to the economy. Financial institutions need to provide credit, and households need to have the wherewithal to both meet their debt obligations and spend. While the Fed right now is downplaying the risk of inflation it cannot be ignored, so the need for future rate reductions will be dependent on actions taken in the financial, credit and consumer markets."

"There is a global element to the cut as well. It will be interesting to see how foreign financial markets, and foreign Central Banks, respond to the rate cut. If overseas markets moderate and Central Banks do not adjust their rates, the dollar will weaken against European and Asian currencies. This will help US exports (and, therefore, the US economy), but imports ought to decline, potentially hurting economic growth overseas, particularly in those countries whose currencies fluctuate closely to the US dollar."

Biographies:

John Dilyard, Professor
St. Francis College Management Faculty
Department Chairman
[email protected]

Education
BA, College of Wooster
MA, American University
MBA, The Wharton School, University of Pennsylvania
Ph.D., Rutgers University

Dr. Dilyard currently serves as the Chair of the Management Department and serves or has served on several standing and ad-hoc committees. He is a member of the Academy of International Business, the Academy of Management, the Eastern Economics Association, and the International Trade and Finance Association. His area of expertise is international capital flows, particularly involving developing and emerging markets, and he is a regular reviewer of papers for the Academy of Management and the Academy of International Business. He has published and presented numerous papers on this topic and has co-edited a book on global financial instability titled Globalization and Economic and Financial Instability published by Edward Elgar. He is actively involved with the Columbia Program on International Investment in the creation and publication of lists that rank emerging market-based multinational enterprises according to the level of foreign assets owned by these companies.

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Behrouz Tabrizi, Associate Professor
Economics Faculty
[email protected]

Education
Ph.D., Nehru University, New Delhi-India

Dr. Tabrizi's is the faculty mentor for the College Fed Challenge which teaches students about how and why monetary policy decisions are made. In his role, he attends a monetary policy seminar with the students and helps them decipher economic data about the U.S. economy and international trade before they present their findings to a panel of economists, college faculty and New York Fed officials. His scholarly research interest is on the Theories of Socioeconomic Development and the related issues in less developed countries. His work concentrates on class-related issues, and the impact of Islamic Laws on the process of "growth" and "development" in general, and the status of women in particular. His published work includes a summary of his article, "The Islamic Constitution, Women, and the Socioeconomic Development of Iran" which appeared in Women and Gender in Global Perspectives, April 2003, Vol. 23, a book review of Michael Zweig's "The Working Class Majority: America's Best Kept Secret" was published by the Review of Radical Political Economics. Dr. Tabrizi is also the moderator of the Economics society and Omicron Delta Epsilon (ODE) at St. Francis College.

St. Francis College, founded in 1859 by the Franciscan Brothers of Brooklyn, is located in Brooklyn Heights, N.Y. Since its founding, the College has pursued its Franciscan mission to provide an affordable, high-quality education to students from New York City's five boroughs and beyond.
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St. Francis College, 180 Remsen Street, Brooklyn Heights, NY 11201
www.sfc.edu