One more thing, that deserves mention. Don't think that it hasn't crossed my mind that this piece by Greg Ip may (probably?) reflect some internal Fed talk that they want to get out to the public. Reuters even picked up the story in one of those rare journalism twists where the story itself is the story.
The article by Greg Ip, the Journal's Fed watcher who is known for sometimes reflecting the views of senior central bankers, said policymakers view this week's decision as a choice between a quarter-point cut to 4.5 percent and not moving at all.
Seems like there are (at least) two possibilities. Either this is supposed to prepare the market for no cut at all, or it is meant to totally disabuse the market of any thought of a 50 b.p. cut before such speculation gets out of control.
It could be a little of both. A cut is not a sure thing. It's probably still the most likely and least risky option. But I'm prepared to be wrong. I just can't imagine a unanimous vote to hold steady, whereas I can imagine a unanimous (perhaps one dissenting) vote for 25 b.p. And I wonder about the signal that would be sent if a vote to hold steady was not unanimous. Whereas if a hawkish member dissents from the consensus to cut, I think that's easier for the market to swallow (a better indicator that they figure that they are slightly below a neutral funds rate), and it would still be consistent with the tone of Ip's article. Comments?
The only thing I take issue with is the notion that "there is little sign of a spillover....." Please listen to the earnings conference calls of retailers and many, many other companies...a good portion of the economy is in dire staits and choking right now. It is a fact. The fact is that companies with international exposure are just not enough to buffer all the rest of the sick inustries and companies. We have to start facing reality.
I think you will get the cut, and I think it will not be unanimous. Poole votes, right? So that's one I'd guess, though the market would almost expect it of him. Could it possibly be more? The Beige Book has enough for Boston and KC to vote for easing. Chicago?
Conditions up here have not improved in the last month.