Perhaps some may want to look in on the Five Rules thread?

Seeing this article in New York Times - Federal Reserve Minutes I am taken aback at one line in their statement:

"'The committee agreed on the need to remain exceptionally alert to economic and financial developments and their effects on the outlook, and members would be prepared to adjust the stance of monetary policy if prospects for economic growth or inflation were to worsen,'' the minutes said."

"Exceptionally alert?" Uh, isn't that just their normal job? Aren't they always ready to adjust monetary policy to meret the circumstances? Or are they saying more or less, "We'll actually start doing our job, for which we are exceedingly well paid, instead of playing Homer Simpson with the economic levers of the nation."

Like it matters being exceptionally alert to the approaching freight train.

Like it matters being exceptionally alert to the approaching freight train.

It's just the open mouth committee trying to manage your expectations and therefore behaviors.

Exceptionally alert is a buzzword meaning they don't want to drop interest rates any further (or the dollar itself may collapse...which you can see is happening now, if you look at the price of gold).

they're doing/saying what they can to keep the game perpetuating (keep the ball rolling).

Can you imagine if helicopter Ben came out & said "Lock & Load..the zombies are on their way"? He CAN'T tell the truth...you can't handle the truth!

Rumor of cut "momentarily".

thestreet

"Talk of emergency rate cut hits dollar"

"“The rumour mill suggests a Fed cut today ahead of the meeting on January 30.” (today being Monday, 14 January, 2008)

ft

I (used to) like checking the Fed Funds Implied Probabilities chart available from the Cleveland Fed: Link
It has been changed for the worse.
It used to show how the implied probabilities changed over time. The graph has been modified as of today to contain significantly less information. It now shows only the "current" implied probabilities. In particular, I was interested to see the discontinuity resulting from the "surprise" cut. I am left to wonder about the decision making process behind this change. I can only guess that the information is "no longer useful" and that they are "saving money", similar to M3.
Does anyone have an alternative source of this information that shows these values over time?

Maybe it is not the same, but I look at LIBOR rates as money markets reflect and anticipate changes in Fed funds. Right now the one year LIBOR is trading at 2.80% which is significantly lower than before the surprise rate cut. This implies more rate cuts to come. At least this is what money market traders are betting on. Also if you look at FRAs (future rate agreements) they accurately reflect future interest rate expectations.

It's back! Maybe it was a glitch due to the "surprise."

Link

wow, 85% of a 0.75% cut or greater.
Another 0.75% would be stupid and disasterous for the dollar. The only problem is, is that the market is such on egg shells these days, that if they don't get that 0.75%, the market will tank.
So a total rate cut of 1.50% it is.

The expectation is so bad that even a 0.5% rate cut; which is a huge cut to do within a week of a 0.75% cut (which is huge in itself) would hurt the market.
There's no way China and Saudi Arabia is going to sit idle through this
Gold: the other white meat

Hey FoxV, this is how I read the chart:

0/4 cut: 3%
1/4 cut: 13%
2/4 cut: 50%
3/4 cut: 22%
4/4 cut: 12%

So probability of 3/4 or 4/4 is 34% (since the events are exclusive of each other).

sorry, with all the stuff I've been reading lately, I lost track of what the Fed funds rate actually was
all the same though, a 0.5% rate cut is going to really nail the dollar (which still hasn't really responded to the 0.75% cut).
The other side of this is not only the ending of the Yen/US carry trade, but the US actually becoming a new source for the carry trade.

Have a look at this table. There's some good options for carrying
World Interest Rates Table
Particularly the ones that are over due for massive currency revaluations (an added bonus)

http://news.bbc.co.uk/1/hi/business/7245312.stm