The thought of rates going up 1-2 more times has been mentioned by a few talking heads. However with a falling dollar what do you do?
A. Most of the economists are changing prediction about rates like a weather coat - there are about 2 that don't - so I do not see a value in that statement C. that's quite a good nonsense again - at least your posts are becoming shorter. I do not see why there should be recession but even if I did I really can't see how rate would avert anything... The impact of fed funds on real economy is grossly misunderstood - and exaggerated.
Bernanke would rather us feel the pain now then later. In May, he looked at the television cameras and appeared to be a menace. Right after that speech the markets reacted as if the stock devil had rose from the earth. I dont want to feel pain, but I can understand where he is coming from. Low interest rates foster huge speculative bubbles that lead to economic panics and crashes later on. Growth and inflation were meant to walk up a stairway, not climb a wall. I would rather the interest rate hikes begin right now then later on in 2007.
Implied probability on fed funds as of last night - looks dull <img src="http://clevelandfed.org/research/policy/fedfunds/2006/December/11/image1.gif"> <img src="http://clevelandfed.org/research/policy/fedfunds/2006/December/11/image2.gif"> Updated daily at http://clevelandfed.org/research/policy/fedfunds/index.cfm