As the markets prepare for next week’s two-day Fed meeting, all the traders agreed that it might be time to suspend expectations that another rate cut is really the right answer.
The Fed is probably going to cut another quarter point, Guy Adami said, but the central bank really shouldn’t do anything because that is what will rally the dollar and, in turn, send commodity prices down. Economic data from the credit markets is encouraging to Adami that the broader market will stage a comeback sooner rather than later and the Fed can stand down for the time being.
Karen Finerman said that, in her view, the Fed already did the most important thing it could do – get financial institutions to start lending to each other again. Another quarter point off the federal funds rate is almost meaningless at this point, she said. It’s Bernanke’s other tools that are showing to be more effective in stemming the crisis.
Jeff Macke remarked that Bernanke should get creativity points for his out-of-the-box style of addressing the credit problems. Now it’s time for the market to ease itself, he said.
What do you think the Fed should do next week? Answer the Charles Schwab Poll of the Day.