I don't get your logic. The curve is steep, shouldn't that mean he should RAISE rates? A steep curve implies that the market expects a rise in interest rates (or inflation) in the somewhat near future, why would you go out and cut rates and exaggerate the curve more???


I am sorry, I am not convinced right now of the need to lower rates. When any change right now takes effect, around March of next year, there is likely to be nothing but an overly stimulative effect on the economy. While the Fed would like to get the economy going, I don't think an argument can be made for taking a major risk at pretty bad inflation for next year. Right now the Fed Funds is below worldwide rates everywhere except Japan and going lower will only exacerbate future inflation, especially since it likely will send the dollar lower over the short term. I have read some of the research notes sent out with these predictions of the rate cuts and I am not sold. They don't look like they really took any economy considerations into effect, they read more along the lines of the need to cut rates is so the stock market can get a floor underneath itself and then an improved market will lead to a better economy. Terrible thinking, the Fed is completely following bad policy if that is how they make decisions so hence I am not so sure that they will appease the market and make the cut.