Filed under: Forecasts, Rumors, Rants and raves, Market matters, Money and Finance Today, Economic data, Oil, Federal Reserve

There have been some rumors floating around about the Fed possibly making an emergency rate cut in the next month in order to “save” the market. If you are one of those people who think that this would be a good idea, remember the old saying: be careful what you wish for, because you may just get it.

With the way the market has been acting lately, it would be easy to look to the Fed to come in early to bail us out with an emergency rate cut, but if this actually did take place I think the reaction would be the opposite of what people would expect. The impression it would send to the markets would be that we are in a panic situation and that things are in extremely bad shape. I just don’t think that is the message that the Fed wants to put out at this time.

Right now, it looks like we can pretty much count on a 50 basis point cut at the next meeting, but rumors are already starting to fly that we could see additional cuts coming quickly thereafter. Do I think that we could use a full percent cut in rates? Yes, I do think that the market is calling for a higher than 50 basis point cut, but I have to believe that any emergency cuts would send out a horrible message to the market.

Continue reading Looking for surprise rate cut? Be careful what you wish for

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This entry was posted on Wednesday, January 16th, 2008 at 4:18 pm and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.