Filed under: Rants and raves, Politics, Serious Money, Oil, Federal Reserve

When the Federal Reserve Board meets later this month to consider lowering interest rates, it seems the question will once again be — by how much? Chairman Ben Bernanke and crew have been bringing up the rear for over a year, doing what they are supposed to do … fret over inflation.

This next meeting might find them doing an about face. Oil prices have been coming down in the face of disappointing economic news, and if that continues Fed Officials may feel they have enough political cover to act. The next meeting of the Committee will be held on Tuesday-Wednesday, January 29-30, 2008.

After the last meeting, the Street was disappointed by the 25 basis point reduction in rates. When the “baby did not get it’s bottle”, the stock market responded with a 300 point drop in the DJIA. This time, I do not think even a cut of 50 basis point will be taken seriously by Wall Street market makers if the next two weeks are similar to the last two weeks. I think expectations are high that the Fed will make a significant move and 50 basis points would be the minimum. But that might be just a blip, coming too late, since the impact would trail the cut by six months at least.

Continue reading Serious Money: 1% drop by Fed is possible

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This entry was posted on Wednesday, January 16th, 2008 at 4:42 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.