The Federal Open Market Committee (FOMC) is meeting next week. Until a couple of weeks ago, many economists were predicting that the
Fed would not reduce the federal funds rate target until 2002. In fact, most economists now expect the Fed to cut the federal funds rate by 25
basis points and the discount rate by 50 points. Fed officials have indicated the past couple of weeks that they still have room to move lower
from current levels (2 percent on the funds rate).
Economic data certainly supports further rate cuts even though we're seeing a mixed bag. Unfortunately, the plunge/recovery nature of
September and October data makes it more difficult to interpret. The Fed is likely to want to err on the side of over-accommodation rather than
on the stingy side that might prevent an economic recovery. Remember inflation is not a concern at this point.
Markets at a Glance Recap of US Markets The Economy The Bottom Line Looking Ahead
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