johnnymk

If so , by how much? 1/4%..1/2% ?

And how long will they keep it down?

Just this week, Greenspan warned that the Fed has the power to control inflation by dramatically increasing interest rates in a very short time. The money supply is increasing rapidly due to the Fed injecting incentives into the marketplace. This is highly inflationary. And the dollar is plummeting.

So I think that by 2008 interest rates could climb way back up even if the Fed performs a cosmetic rate reduction this week.

zippyjuan

I personally don't see that much of a reason to at this time- but that does not mean that they won't. The financial markets have been clamoring for one- and probably have a cut factored in to decisions they have been making so if one does not come, I would expect a retraction in the stock market for a couple of days. Maybe the Fed will give them a quarter percent just to pacify them. The Fed had been trying to temporarily increase liquidity in the market through other means and a rate cut would be a more long term tool and given that the credit crunch seems to have eased for now, this is why I do not think they should lower rates now.

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Chgoman

The pricing on the market shows an expectation of at least 1/4 point and a 70% chance of a 1/2 point reduction. I think a 1/2 point would make the market 'happy', a quarter point would actually cause a little see off since they are hoping for more and no move (which won't happen) would cause a huge sell off leading to a rate reduction prior to the next meeting.

Just my thoughts.

zippyjuan

Greenspan is out promoting his new book and is saying that he has concerns about inflation and higher interest rates in the future and feels that the Fed will have less ability to effect that. His primary concen for that is China- which is being forced to increase the inspection and quality of goods- reducing the ability of Chineese producers to cut costs however possible- and increasing the prices for goods from China.

His favorite President for economic policy? Bill Clinton because he felt Clinton's policies had more a view towards their long term impact. He (Greenspan) was in favor of some of the origninal policies of the Bush administration (a limited tax cut and spending reductions) but said that Bush abandoned these policies (extended the tax cuts and even added more along with massive increases in deficit spending) and that they deserved to lose the Congress in the last election and to lose this time around. He also liked Reagan for his clarity of beliefs.


Asked who he would like to see as the next president:
http://www.msnbc.msn.com/id/20803170...wsweek/page/2/
http://www.msnbc.msn.com/id/20789998/site/newsweek/

cruelpupet

Im hoping for a full point. Gotta refinance in the next year or so.

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zippyjuan

Fed rate cuts do not necessarily effect mortgage rates. The tighter credit market is having more of an impact than a cut in short term interest rates. I was watching both while the fed was going through their last series of cuts -hoping to refinance myself then- and the rates did not go down despite many moves by the Fed to reduce short term rates. If it happens, this one will not make any difference.

Chgoman

Mortgage rates are more related to long term inflation rather than short term interest rates. Because of this the first cut or two tend to help mortgage rates marginally since they are seen as good for the economy. As more rate cuts occur over time, it can actually have a negative effect on mortgage rate, pushing them higher a lower fed rate can lead to higher inflation long term which would push mortgage interest rates up.

Prngr44

I watched the 60 minutes bit too. I'll probably give his book a read too.