Economic Overview

Ben Bernanke's helicopter finally took flight last Tuesday, and he opened the hatch and dropped a surprise 75 basis point cut in the federal funds and discount rates.

The inter-meeting rate cut came just nine days before the scheduled January 30th FOMC meeting, and was the largest single cut in 20 years. Disclosure of an economic stimulus package from President Bush and jawboning by numerous Fed officials and Treasury Secretary Paulson could not stem the international equity and credit market meltdowns that finally spurred Mr. Bernanke into action.

The credit markets have calmed and concluded that a Fed cut is better late than never. Federal funds futures instantly demanded another 50 basis point cut to 3% at the January FOMC meeting this Wednesday. The odds of such a cut are gyrating on a daily basis, from 75- 95% likelihood. Clearly, the market would be disappointed if the Fed does not do the follow-on cut, and at the moment the market is in charge - not the Fed. READ MORE >>

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Interest Rate News Top 10

1. Fed May Hint at How Long Rates Will Stay at Lows
2. Fed policymakers to debate how and when to signal that higher interest rates are on the way
3. Bond market 'highly vulnerable'
4. Health and social care group to meet in Yeovil
5. Look before you leap for student loans and for-profit schools
6. Canadian inflation data could nudge dollar close to parity this week
7. Drug money used as a geopolitics weapon
8. Inflation data could lift loonie close to parity this week
9. RPT-Wall St Week Ahead: Data, Fed to test if rally has legs
10. National Freeway Bureau mulls new freeway toll plan