Taking predictions on the Fed's rate decision next week.

[swag]

The FOMC will announce its rate decision on short-term interest rates next Wednesday, September 20, at 2:15 Eastern Time.

My bet this time around is that they will maintain their "pause" mode, and leave their short rates at 5.25% with very little change in their bias statement.

With commodity and housing prices easing off their highs, and with other economic data softening up, there is no reason for the Fed to raise rates any more at this point.

[Warpy]

1. Oh, yes there is

The dollar continues a slow slide on currency markets, making our debt look less and less attractive.

Rates have to be high enough that China, Japan, and the other debt holding countries will continue to hold that debt. They're not going to lose money on the deal, you know.

[swag]

2. To that, I'll say what I said to the same argument

last month, and will also note that the US Dollar Index is actually a little bit above where it was when the Fed didn't raise rates in August.

Anyway, is your bet that the Fed will raise to 5.5%?

Thanks for playing.

[Warpy]

7. My bet is that the interest raises aren't over

even if they don't raise them this time around. Those rates are going to rise eventually. They have to.

Thanks for playing.

[swag]

9. You're welcome.

Still, I don't see why you say the Fed has to raise rates eventually. Based on your currency analysis? Dollar strength is not the exclusive US goal at this point. If it were, why would Treasury be constantly harping on China to let its currency appreciate against the dollar?

[Double T]

3. FOMC will continue 'pause' mode until after the elections.........

so as NOT to piss off the rethug filthy rich segment of their base.

[swag]

4. What do you see them doing after the elections?

I see them starting to lower at least by March of next year.

[OrangeCountyDemocrat]

6. Bingo!

They're going to let the dollar collapse, unless they have the Plunge Protection Team watching out for that.

They'll keep interest rates low, so as not to exacerbate the housing collapse coming soon. This will also prop up the stock market, which likes the low interest rates.

[OrangeCountyDemocrat]

5. What Double T Said

EXACTLY! No rate changes until at least after the election, unless it's to Lower the rate to 5.0%.

They're going to do everything possible to keep the repubs in control, before everything collapses, and it's too late to do anything about it for another 2 years.

I'd say the chances of an increase are Slim and None, and Slim has left the building.

[swag]

14. I bet Double T was thinking the Fed would start raising again after the

election.

That was the inference I drew.

Like you, I think they'll begin lowering, probably by next Spring, but I don't think it has anything at all to do with the election.

[DireStrike]

8. The fed, at least under greenspan, does nothing because of the economy.

Which action will help the administration more? That is the one they will take.

[swag]

11. Greenspan hasn't been Fed chair for a while now.

Anyway, I disagree with your thesis.

So, what's your prediction for Wednesday?

[swag]

10. Tame core CPI this week and the decline in Industrial Production

point to a continuation of the pause.

Interestingly, the dollar is up a bit today from earlier in the week.

[swag]

12. Gee, that darned ol' dollar rose again.

Rose against the Yen, and to a seven week high against the Euro. I'm sure not a dollar bull, but these and other recent medium term currency moves belie the claims made in August that the dollar would plunge if the Fed paused. Three-month T-bill rates are not the only determining factors in dollar valuation.

Another reason for the dollar's pesistent strength in the face of most expecting its continued fall is the Japanese appetite for US 10-Year Treasury Notes, over whose effective interest rate the FOMC has had little influence in recent times.

And as for those short rates, there's no way the Fed will raise on Wedneseday.

[swag]

13. Nobody sees a hike?

Nobody sees the Fed going to 5.5% on Wednesday?

Anybody see the Fed shocking the world and going to 5.0% on Wednesday?

[newportdadde]

15. A pause till after the election possibly till first of 07.

At which point they will decide if they want to just inflate their way out of the deficit at which point rates will start to decline next year for a stock market prop and an economy prop or if they should raise some more and clip those on the edge.

I can't believe I just said they would lower it, goes against my natural logic but that is what I see.

[swag]

16. Hasta mañana! 2:15 Eastern.

Fed will hold at 5.25%. Statement will remain almost pretty much the same as at August meeting.

[David Zephyr]

17. No rate hike next week. A rate reduction early next year.

The only rationale for worry over inflation was energy prices. They are down (for now) and so is the rate hiking by the Fed.

The long term bond market rates are actually lower than short term (this is called an "inversion") and this has, historically speaking, trumpeted recession.

Because of the above, the Fed will want to prevent a recession or hard turn-down and might possibly begin lowering rates by Spring 2007 or sooner.

No rate hike next week.

[swag]

18. Je suis d'accord.

[David Zephyr]

20. OK, what did I win?

I am surprised that anyone would think they would have done otherwise.

[swag]

21. A no-fee savings account at Emigrant Direct.

[swag]

19. Kick for last-minute guesses. T minus 15 minutes.