Possible rate cut for the worst financial crisis EVER!!
Markets are likely to tank today - an emergency Fed rate cut can't be discounted.
It seems so long ago
Remember how analysts were calling for likely rate increases last month, yet I was sticking to my call for further rate cuts:
End of week economic reality check (Aug 08)
"Mark my word -- we'll see another cut before a rate hike"
Bernanke's Next Moves (June 08)
Baring any drop below 11,700 on the DOW between now and June 25th, I expect the fed to pause at the next FOMC meeting(no action on rates) -- If we do drop below the stated number, expect a new rate cut.
I expect Credit Crunch Phase-2 to kick in by Aug/Sept 08, and it will likely make phase-1 look like a walk in the park, so expect a cut at one of these meetings and another in October 08.
By December, semantic debate over our full-blown economic recession will be over/recession will be unquestionable and our newly elected President will demand action -- so expect another cut.
Bottom Line: Expect a 1.5% or lower FFR between now and the end of this year and a 1% or lower in 09.