Fed Rate Cut Expections

WSJ has this on what the Fed is going to do at the next meeting. A 25 basis point cut is already expected. Since all fed officials have been openly talking about a rate, I would expect a 50 basis points cut. The fed like to surprise the market and they can only surprise with a 50 basis point cut. Also, remember they have been talking about "Equity" prices. If the market is down again, they will cut it 50 basis points.

Some analysts have also been talking about cutting the Discount rate or by lenghtening the loans.

http://online.wsj.com/article/SB119681606229313739.html?mod=hps_us_whats_news

How big a cut and what to say in the accompanying statement are likely again to be difficult decisions, as they were on Oct. 31 when the Fed cut its short-term interest-rate target to 4.5% and issued a statement suggesting no more rate cuts were likely.

Futures markets expect at least a quarter-percentage-point rate cut and see a two-thirds probability of a half-point cut. Fed officials will likely consider the larger cut, but some might find it hard to justify when just a few weeks ago they thought they were finished cutting rates.

Some analysts say the Fed is more likely to deliver a quarter-point rate cut and drop from its statement last month's characterization of risks of weaker growth and higher inflation as equally balanced. That would implicitly leave the door open to additional easing, without leading investors to presume further cuts were coming.

An alternative option would be to auction off credit at its discount window, as the Bank of England has done. Another would be to extend the term of discount-window loans to 90 days from 30 days.