Fed Cut: 25 or 50?

Posted by John Carney, Jan 29, 2008, 5:04pm

Following this morning's economic reports the widely expected 50 bps cut from the Fed became a little less widely expected, with the futures showing a drop from 86% to 72%. An internal poll at Morgan Stanley, however, showed the opposite, with 73% of respondents predicting only a 25 bps cut, according to an email sent to clients this afternoon.

Our own polling, which had over 1,700 respondents, showed almost an even split between a 25 bps cut and a 50 bps cut. No other position got a significant number of votes. So we’re asking again, with just two options.

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Posted in: Fed, Reader Poll

Comments

Posted by , Jan 29, 2008 5:26PM

can't we have an option for 100? Or perhaps Ron Paul as option 3?

Posted by Anon, Jan 29, 2008 5:42PM

BB strives to surprise. 25 or 50 is already baked in in predicitions, so it would not be surprising. I say he'll go for a 100 and be done with it.

Posted by AJ, Jan 29, 2008 5:43PM

50bps and I hate the Fed for it... if they had been smart last week, it would have only been 50 bps total, not 125

Posted by Ken Houghton, Jan 29, 2008 6:42PM

Nothing less than 50 makes last week's move make ANY sense; nothing less than 75 makes last week's move make sense.

But I see the quarter leads as the economy bleeds.

Posted by Anonymous, Jan 29, 2008 8:42PM

When Ron Paul is President the FMOC will be disbanded.

Posted by , Jan 29, 2008 10:10PM

FFIP

go


in bloomberg

Posted by Finn, Jan 30, 2008 3:05AM

Bernanke has the choice of give his all (meaning 50 to 100 bp) and seeing the market rise briefly, then fall under the weight of ongoing reality.

Or he can do 25bp, and watch the market fall.


With the small cut, he can save face and and say "Well, we could have propped the market if we wanted to, but are being responsible" (all the while praying the market rises).

With a 50bp cut or more, he basically tosses all his power into the ring, only to demonstrate to all that the Fed is powerless (as well as desperate, and foolish).

Either case, market is falling, so best maintain some firepower and dignity in the process. So 25bp.

In any case, seems like Asian markets are not willing to wait to see what NY does today.

Posted by DaCrookFromDaBrook, Jan 30, 2008 6:54AM

The Fed will cut as much as they feel it will take to keep the market from falling because it's their job to make sure stocks don't fall.

Posted by series7.5, Jan 30, 2008 7:56AM

Interesting you say that. The US equity markets could have been down as much as 10% if the Fed did not cut. That is a huge loss in asset power for US households, the kind that does in fact change investor as well as consumer psychology. I'm not saying it is the Fed's job to protect the stock market but I do think it is shortsighted to say such a crash does not affect the economy in a way the Fed should be concerned.

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