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EScroogeJr (< 20)

To cut or not to cut?

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October 30, 2007 – Comments (3)

The discussion topic de jour is the probability of another 0.25% cut. Taking the risk of being held accountable for the wrong prediction, I will offer my take: no cut this time. The reasons are: a) inflationary pressures are very real and b) housing is still in sufficiently good shape. This prediction comes with a disclaimer: I'm assuming that Bernanke is not overwhelmed with irrational fear like most housing bears in Caps. This disclaimer is necessary because Bernanke will not hesitate to drop the rates to minus thirty percent if he feels that this is what's necessary to rescue homeowners from possible depreciation of their valuable asset.

3 Comments – Post Your Own

#1) On October 30, 2007 at 11:49 PM, TMFHelical (98.75) wrote:

I vote to expect a cut of 0.25.  And perhaps one more later.  But that is pure speculation.

I would not be surprised if there was none.

 

Zz 

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#2) On October 31, 2007 at 1:22 AM, camistocks (< 20) wrote:

Credit markets are still dead, housing is in recession, so the Fed will lower rates for sure. 0.5 % cut! Just IMO.

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#3) On October 31, 2007 at 8:14 AM, EScroogeJr (< 20) wrote:

If they lower rates again, oil will sell for $100 Bernanke dollars, which makes people more depressed, which raises the pressure for more cuts. So I don't think they will do this unless they have to.

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