Dollars and Jens
Thursday, January 31, 2008
Upcoming Interest Rate Hikes
Investors in fed funds futures contracts immediately assumed that was an indication the target would be cut again by another 25 basis points at the next FOMC meeting on March 18, or by 50 or maybe even 75.

Actually, by mid-March, it might be clear that the U.S. economy isn't in as much trouble as a lot of investors think it is because they're shocked by the plunge in housing construction and sales and by the subprime-related losses at several major banks and brokerages.

Rather than more rate cuts, 2008 may see a replay of 1988, when the Fed quickly raised rates to control inflation after the growth scare caused by the October 1987 stock market crash dissipated. The sheer size of the Fed's easing may ensure that.
He makes a case for it.

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