That kind of rate cut here would a disaster. The US Fed has been way out in front of this rate cut issue. The Aussie, Kiwi, Pound, Euro... all have rates that need to be cut, and have much room to do so. We're already at a point that such a cut won't really help. Interest rates are not the problem here. Money is already cheap to borrow. It's liquidity.

 

We need to sit on our hands and keep our rates at 2%, the Fed has injected over 2 trillion dollars into the financial system in the last 6 months and opened the discount window. I see no reason for them to cut rates even by .50 basis points.

Now, just because I said that the FED will probably take them back down to 1% like Greenspan did.

Made a killing in my forex account being short the AUD AND NZD, New Zealand will most likely follow Australias lead and cut rates by a 1/2 or full point on their next meeting October 23rd.

 

No doubt. NZ is in worse shape than Australia. They've got plenty of room to cut. The Aussie has come off like no one's business. I swear it was just yesterday that it was looking towards parity.

 

Speaking this afternoon, Bernanke said:

Outlook for inflation has improved somewhat while risks to growth are higher. "In light of these developments, the Federal Reserve will need to consider whether the current stance of policy remains appropriate."

That sounds like a rate cut to me. Even so the markets aren't recovering.

IMO a rate cut is a mistake.

 

Unfortunately I think he will cut rates again and no it will not help. Keep an eye on the Euro and the Pound. The ECB and the U.K. Central Bank are under tremendous pressure to begin cutting rates.

 

Trichet and the ECB like to keep their heads in the sand, but they should have cut rates a while ago, same for GB.