Predict the Fed thread. Interest rate announcment tomorrow.

[swag]

I'll make the obvious prediction and say that the FOMC will remain paused at 5.25% and that the bias statement will be almost identical to the previous one.

[Warpy]

1. It all depends on what they're more afraid of

consumer inflation or a housing bust.

The bust seems to have leveled out a bit with the last lack or a rise in the rate, so they could be confident enough of the magic of the prime rate to raise it to deal with inflation.

It won't work, of course.

[HereSince1628]

2. I think that's about where I am...they'll wait until after the election

even if they think they need to raise it.

[OrangeCountyDemocrat]

3. Gee....I Wonder If They Know There's An Election In 2 Weeks

Given that, I'd say there's a 99.999999999% Chance that they won't do anything with rates tomorrow.

I'll also go out on a limb and predict that gas prices will stay low for at least 2 more weeks, and stocks will stay at high levels.

[Lucky Luciano]

5. Politically motivated or not, it would be stupid

to raise rates right now.

[phoebe]

4. slight reduction

n/t

[Selatius]

6. Economy too weak/uneven/inconsistent, I say: Keep the same rate.

You don't want to throttle a shaky economy with high interest rates.

[LibertyLover]

7. I think they might cut it a quarter percent

in October, leave it unchanged November and December and raise it either January or February of next year a half percent, just after the new Congress is seated, with some sort of announcement that says it's the fault of the Democrats for getting elected.

[skids]

8. They will remain on pause until after the election.

When they pause, it keeps the dollar down (inflation up.) However that also means the low value of the dollar makes stocks worth more. That will raise the market on paper (if it doesn't then that's big trouble because if the market and dollar go down together the market is going down faster than it looks.)

At any rate they are pulling for the Rs, so they will keep it set at 5.25%. When the announcement is made, foreign investors will take a look at Euros and other currencies and commmodities and the dollar will flatline or tank and stocks will soar -- just long enough to keep it above 12K for the elections.

Thereafter we'll see how much of the "support" in the market is for real.

[stop the bleeding]

9. Pause until sometime around Feb - April timeframe n/t

[hvn_nbr_2]

10. I don't know about tomorrow, but between now and May 2008...

they will overall lower rates.

During every 4-year presidential term since JFK (before that, they didn't tinker with rates often), during the period from 30 months to 6 months before the next presidential election, they've lowered rates if the incumbent president was a Republican and raised rates if the incumbent was a Democrat. Economic conditions, inflation, deficit or surplus--none of that matters, it's all politics during this period. All of Greenspan's old esoteric explanations of third derivatives of obscure statistics that nobody ever heard of--it was all a smokescreen.

[swag]

12. I would suggest that that's quite possibly effect rather than cause,

since the economy (and the US stock market) tends to do much more poorly under Republican administrations than under Democratic ones, hence the need for the Fed to put the brakes on, as it were, during gangbuster Democratic economies.

[hvn_nbr_2]

13. That's certainly a better explanation than the usual talking point that...

That's certainly a better explanation than the usual talking point that Dems are such big spenders that they have to raise rates to restrain inflation.

However, it doesn't explain why the Fed's actions during the other 24 months of presidential terms don't vary according to the party of the incumbent president. If that were the real reason, then I would expect the pattern to apply during whole terms rather than only during halves of terms.

[elfin]

11. Agree - but the statement

will be infinitesimally more negative.

[swag]

14. 2 hours 30 minutes away from the non-event kick.

[radfringe]

15. it'll stay the same

no change - they wouldn't raise the rate with the (s)election 1-1/2 weeks away

[swag]

16. Fed holds at 5.25%. A little change in the statement.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aXQDWoTKWwdk&refer=home

Oct. 25 (Bloomberg) -- The Federal Reserve kept its benchmark interest rate at 5.25 percent for a third month and reiterated that officials are relying on lower energy prices and slowing growth to reduce inflation.

``Inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions,'' the Federal Open Market Committee said in a statement today after meeting in Washington.

Policy makers are waiting for evidence inflation will ease amid mixed reports showing resilient consumers, low unemployment and a sluggish property market. In one of the few changes to its statement, the Fed predicted the U.S. economy will expand at a ``moderate'' pace after slowing through the course of the year.

``Some inflation risks remain,'' the Fed added. ``The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth.''

Richmond Fed President Jeffrey Lacker prolonged his dissent, preferring a quarter-point increase. The Fed nudged borrowing costs higher at each meeting for two years through June and the decision in August to suspend the increases cost Chairman Ben S. Bernanke unanimity on the FOMC.

. . .