This is what the end of the line looks like.
The Federal Reserve announced this afternoon that it was “establishing a target range for the federal funds rate of 0 to 1/4 percent.” This is a bit like a fish issuing a press release that it will hereafter be swimming in water.
The target rate for Fed funds is lowered anew to just above zero, but the effective Fed funds (which is based on actual banking transactions) is already there, and has been for some time. Nonetheless, Bernanke and the boys are right to announce the new lower range for the target Fed funds, which works out to as much as a 75-basis-point cut from yesterday’s target rate. Just don’t hold your breath for an encore performance when the next FOMC meeting commences on January 28-29.

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For the second month running, consumer prices fell. And by more than a little, invoking the specter of deflation once again.
CPI slumped by a hefty 1.7% in November on a seasonally adjusted basis, the government reports today. That follows October’s 1.0% fall. More dramatically, last month’s tumble is the deepest monthly decline in CPI since the Labor Department began keeping records on this series in 1947. Meanwhile, MarketWatch.com reports that the 1.9% non-seasonally adjusted fall in CPI is the steepest monthly rate since January 1932—the height of the Great Depression.

Meanwhile, core CPI (which strips out food and energy) is unchanged, following a slight decline in October. As this is the Fed’s preferred measure of inflation, even a central banker can’t deny that inflationary pressures have evaporated, at least for the time being.

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