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A new intermeeting rate cut survey
Wednesday, February 06, 2008
The last time an intermeeting rate cut survey was posted here, on Monday, January 21st, it lasted less than a day. Ben Bernanke and the boys at the Federal Reserve brought the "shock and awe" early Tuesday morning with a three-quarter point cut to the Fed funds rate and then added another half point cut a week later.
Well, apparently that was just the beginning.
After yesterday's disastrous ISM Non-manufacturing survey, Fed funds futures markets are now indicating more than a 50 percent chance of another three-quarter point cut by next month, as shown below courtesy of the Cleveland Fed (oddly, a quarter-point increase is more likely than no change).
Whether interest rates will be lower next month doesn't really seem to be a question anymore and whether they'll be a lot lower seems to be pretty clear too.
The only real question is whether we'll be able to make it another six weeks without some more medicine from the Fed.
Your opinion counts!
No, not really. But go ahead and cast a vote anyway.
The survey will appear on the right sidebar, gradually moving down in the days ahead, until such time that interest rates are lowered or we get within a few days of the March 18th FOMC meeting.
6 comments:
I think the manufacturing index is more important. The Fed will hold until they see signs it's slipping.
I was looking for the website for The Economist. I typed in "theeconomist.com" and saw something shocking, but in a way pretty funny, honoring your hero, complete with large picture of the Economist of the Century. I wonder if he bought the url.
It's got a good beat and it's easy to dance to.
I give it 50 bp.
So....
what happens when we run out of bps?
Japan?
Ben might want to hold off if this administration seriously wants to avoid an even bigger and more obvious recession before November. I think these rate drops are not helping and in fact hurting since they are tanking the dollar. But I'm not so sure disastrous results are avoidable anymore.
The situation does seem to mirror Japan almost exactly, but I don't think the rate drops are really hurting anything noticeable. It's not like the banks and insurance companies who are working overtime to figure out how to stay solvent long enough for their executives to cash out more before their massive losses hit their books are going to really be focused on loaning out more money for million dollar mansions to people who couldn't afford trailer homes.
Sure, it'll cause higher long-term inflation, but the multiple massive incoming government spending bailouts (er, "stimulus packages") will probably dwarf that. Besides, it's not like real inflation isn't already around 15%... what's another few percentage points? It's the American way: don't worry about exacerbating problems as long as you can push them off onto future administrations and/or generations.
We have to find this. It sounds like a hoot.
http://bloomberg.com/apps/news?pid=20601039&sid=a96RXmg5XRuc
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