Wells Portfolio Manager Commentary
Wells Fargo Advantage Money Market Funds' latest Portfolio Manager Commentary says, "On December 16, 2008, the Federal Open Market Committee (FOMC) lowered its target for the federal funds rate from 1.00% to a range between 0.00% and 0.25%. In the statement released after that meeting, the FOMC said, "the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time." Now, four years later, having seen that low rates have failed to stimulate appreciable economic growth, many believe that the low rate environment that has plagued savers for nearly half a decade is really aimed at providing interest-rate relief to debtors and staving off a deflationary debt spiral that would threaten those burdened with extraordinary levels of debt, including the U.S. government. This would argue against a rise in the federal funds rate in response to improving economic conditions.... Indeed, over the coming months, we see a number of factors that could combine to push short-term rates even lower.... Demand for short-term investments may see some spike with the expiration of the unlimited Federal Deposit Insurance Corporation (FDIC) insurance on noninterestbearing transaction accounts."
