Wednesday, when the Federal Reserve wraps up a two-day meeting to determine whether it will raise short-term rates. An informal poll by yours truly, however, finds that any rate hike is unlikely, a conclusion seconded by the Fed fund futures, which suggest an 8% shot of a boost.
“I doubt there will be a rate increase,” a Los Angeles money manager, Arnold Silver of A. Silver Associates, says, “but if I’m wrong, there will be hell to pay on Wall Street.”
A trader at London-based Stahler, Dearborn, Ltd., Dennis Healey, concurs. He says the Dow, in response to a rate increase this week, will tumble at least 150 points, and perhaps as much as 300 points. On the other hand, if, as he expects, the Fed forgoes a rate hike, the market most likely will react positively.
“They won’t raise rates because the economy’s too shaky,” a professor of economics at the University of Maryland, Peter Morici, tells me. “A rate boost would only exacerbate the economic slowdown, and it wouldn’t impact inflation because it won’t lower rising oil prices.”
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