how much do you think the Fed will cut?

i've been thinking at least 50bps, even after the $200bn influx this morning...clearly, Mr. B is not as interested in inflation concerns as he is stabilizing economic presures from subprime, oil, and the dollar

 

I'm hoping none... I'm more worried about inflation.. CPI was 4.1 last year...

I'd guess 25bps... but he's gonna run out of bullets quickly if he keeps dropping at every meeting...

 

If Bernake is following what Japan's central bank did during the 90s to combat their recession economy, then he will continue to cut the rate.

From my un-educated opinion, the only way we will get out of this mess is when housing purchases go back up. The sub-prime market was a major contributing factor to the current situation, so logically it would take a positive trend in that area to see us progressing up.

 

VIVA Commodities!

 

I don't see cutting rats again doing very much. rates aren't really the problem here....

 

rates aren't the problem, but rates do help to offset existing problems, and i think that's why Mr. B is going to do 50 or possibly more next week...clearly, he's more concerned with subprime, oil, and the dollar as evident in his testimony to Congress last week...consensus among economic strategists was split that the Fed would cut inbetween meetings too, and they haven't done anything yet, so perhaps Mr. B is waiting to do more on the 18th...as far as the what the effects of cutting are going to be on the economy, who knows...just b/c the market rallies 300 points on any given day doesn't mean the market has bottomed...you need some time to let the market digest changes in rates and see how they impact other economic indicators...plus, who knows if the President's "booster shot" tax rebates will help the economy either...prolly not much at all, but it may a lil

 

as of this morning, futures market is completely priced for 100bps cut...i personally think that's too much...last week i said at least 50...now i'm thinking it's going to be more like 75...as of yesterday, 22% of the market was priced for a 125bps cut, which imo is nutty!!

interesting statistic...for every 5bps cut, barely more than 1bps has actually hit the private sector...should be interesting to see what happens today!

 

March 18 (Bloomberg) -- The Federal Reserve cut its main lending rate by three-quarters of a percentage point to 2.25 percent as officials try to prop up the faltering economy and restore faith in the U.S. financial system.

Chairman Ben S. Bernanke is struggling to cushion consumers and companies from the worst of the credit freeze that's made some of the world's biggest banks reluctant to lend to each other. Officials also showed renewed concern about inflation, making a smaller reduction than traders anticipated. Two policy makers dissented in favor of ``less aggressive action.''

``Recent information indicates that the outlook for economic activity has weakened further,'' the Federal Open Market Committee said in a statement today after meeting in Washington. At the same time, ``inflation has been elevated, and some indicators of inflation expectations have risen.''

The Fed has cut the benchmark lending rate by 2 percentage points this year, the most aggressive easing since the federal funds rate became an explicit target of policy in the late 1980s.

The decision follows a week of emergency actions by the U.S. central bank, which has pushed its $900 billion balance sheet into the front lines of market turmoil to quell a collapse of brokerage firms and market making in mortgage-backed securities.

The Fed has lowered its benchmark overnight rate six times and the discount rate eight times since the middle of August, when the collapse of U.S. subprime mortgages started to infect markets around the world. The world's biggest financial companies have posted at least $195 billion in writedowns and credit losses tied to American mortgage markets as of March 14.

Last week, the Fed said it would swap out some of its Treasury holdings for mortgage-linked bonds issued by government-sponsored enterprises such as Fannie Mae and by private companies. On March 14, the Fed extended an undisclosed amount of credit to Bear Stearns Cos. to stave off a collapse, invoking a little-used rule that allows the central bank to loan to non-bank corporations.

Two days later, the Fed expanded on that rule and set up a lending window for dealers in government bonds, similar to the lender-of-last-resort function it has traditionally reserved for banks.

The moves helped relieve some stress in credit markets. Yield differences on a Bloomberg index for Fannie Mae's current- coupon, 30-year fixed-rate mortgage bonds and 10-year U.S. government notes narrowed about 22 basis points to 176 basis points, or 61 basis points less than the 22-year high reached two weeks ago.

Still, mortgage lending will tumble to an eight-year low this year and house prices will continue to decline, according to the Mortgage Bankers Association.

Mounting foreclosures are adding to the glut of unsold homes, and that is driving down property values. Home prices in 20 U.S. metropolitan areas fell in December by the most on record.