starburst
I agree that many think that further cuts will be required but the Fed will be very wary of repeating the mistakes Japan made in the 1990's. Bernanke is a student of the great depression and of the Japanese economic debacle of the 1990's.
Following asset bubbles bursting (real estate and stock prices) in 1989 the Japs took forever to lower interest rates but when they did they took them all the way down to around the levels we've seen during this decade (effectively zero.) This created a liquidity trap in that the Bank of Japan could no longer use fiscal policy to stimulate the economy when required. Japan ended up with a prolonged period of stagnant economic performance known as the "lost decade".
I'm not convinced the Fed will agressively cut rates at the rate the US markets would like to see. But I could be completely wrong!!
Regards
- Hardballgets
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