Before the onslaught of the credit crunch, it was widely believed that the Fed would raise rates to cool inflation fears. I remember on BestCashCow reading quite a few articles discussing fears of inflation and real inflation versus core inflation, etc.
The credit crunch though has done the work for the Fed. Since the crunch happened, rates on certain bonds and mortgage products have already risen, dampening some of the economies growth and easing those inflation fears. Europe recently found itself in the same position, and instead of raising rates, as was expected several months ago, left the alone.
My bet is that the Fed decides to do nothing and leaves the Federal Funds Rate at 5.25%.
The jobs report tomorrow will be the first indication of what is happening. If the report comes in stronger than expected, as I think it will, it’s a pretty good indication that the Fed will remain on the sidelines.
Related Articles:
Summer Vacation for the Fed by PhilR - Jun 23, 2007
Fed Interest Rate Decision Coming on Thursday by JRubinstein - Jun 27, 2007
Heads in the Sand -- Inflation sure ain't "moderate" by walt - Jun 29, 2007
Jeremy Siegel: Rising Bond Yields Mean Trouble for All Markets by PhilR - Jun 20, 2007
Market Commentary with Mark Schmeer, President of MFC Global Investment Management by PhilR - Jun 28, 2007
U.S. ISM Services Index Reached 14-Month High in June by Sam Cass - Jul 05, 2007
Semi-interesting discussion on where the market is going. by Thomas Bivens - Jul 09, 2007
Weak Retail Sales Could Convince Fed to Cut Rates by PhilR - Sep 15, 2007
Fed Chairman Summary of Bernanke's Speech to the Economic Club of New York by PhilR - Oct 15, 2007.
