The Fed's surprise 3/4-point rate cut gave investors a jolt of confidence and will probably help the consumer better navigate a weak economy -- if the Fed continues an aggressive program to trim rates.
Traders pretty much agree that without the surprise move, the stock market would have continued its nosedive and would have ended incredibly ugly today. Widely rumored by the markets, the bold, oversized, inter-meeting cut to a 3.75 percent fed funds target rate was the answer to some traders' prayers.
But still, the back-of-the-mind question is: Did the Fed overreact and give markets too much of a good thing?
Tony Crescenzi, Fed watcher and chief bond market strategist at Miller Tabak, has some concerns.
In a note titled, "The Bernanke Pacifier: One Downside of the Cut," he points out that the Fed has now lost control of the timing of its policy actions and there will be a dislocation when it finally wrests back control.
Crescenzi says the Fed missed one of several opportunities to cut rates, when December's weak jobs data was released Jan. 4. He says that now, to regain control, the Fed must disappoint the markets at some point -- and we know that could get messy.
"It would have been better, for example, for the Fed to have chosen a 50 basis point cut today and another 25 basis points (or at most another 50 basis points) to help differentiate the reasons behind the cuts," he wrote.