Fed: Will They or Won’t They?

by Alex Stenback on October 31, 2007

Fed_fundsLots of handwringing in the media and blogs on the question, "Will the Fed cut rates" today.  In Fed futures land, the odds of a quarter point cut stand at 75% (see graphic.)

Despite some smart minds arguing that the Fed should not/will not cut at this point, the markets are expecting a cut, and if one thing is certain since the dawn of the Geenspan era, Mr. market gets what Mr. Market wants when it comes to Fed policy.

Let this also serve as a reminder:  The Fed does not control mortgage rates, and how these rates or the market at large will react to any Fed move is hard to predict, and will be based more upon the Fedspeak contained in the policy statement accompanying the Fed cut.  Recall that on Sept 18th, when the Fed cut, long term mortgage rates actually went up.

Fed Statment out at 1:15 central, here.
Highly entertaining Fake Fed Statment Generator Here, via Kedrosky. 

Grab Some Popcorn.
Why a Rate Cut Isn’t a Sure Thing [WSJ]

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