http://bp2.blogger.com/_pMscxxELHEg/R5FN0lX1mpI/AAAAAAAABfM/T6yrPUBwSRg/s1600-h/FedFundsJan18.gif has the fed ever cut this much?
In January 2001 they did two cuts of 50 (the first was a surprise, the second at a scheduled meeting), but no single change of more than 75 since 1990 (the 75 was actually an increase, in 1994). There's history here: http://www.federalreserve.gov/fomc/fundsrate.htm
If Ben wanted to cut 100 bps, he would have done a suprise (term used loosly half the population was expecting it) rate cut on Friday. I believe we will see 75 then 25 or even 50 at the next. That's what fed fund futures are predicting too.
Imagine he just does a 25 next meeting then says that all. The markets would jump off a cliff if that ever happened.
EVERBODY'S getting stupid... the Fed, the market's demands, the Gummint. The Fed has only just so many bullets. What will we do when the rates get down to 1% or 0%? And surprise, surprise.... dropping rates won't help as much as people think (unless the market guys are just hoping for a BS bounce to let them out of their stuck longs) The problem is too much deficit spending, too much consumer debt, and crappy mortgage assets... leveraged with reckless derivatives.
I suspect they are going to do a double whammy like in '98. First, September 30th that didn't stop the dropping stock prices followed by another rate cut two weeks later. That got us up to the Dot Com bubble. (They better hurry up..we have to keep muddling along...)
A 17% chance of a 100bp cut? Is the market crazy? The Fed has given no indication it will cut this much. I still expect a 50 bp cut. But maybe they'll cut the discount rate a full 100 to put it in line with the fed funds rates.
Exactly HOW are rates a problem? Maybe Gentle Ben realizes this and that's why he didn't make the surprise cut everyone was looking for. Maybe he only cuts .25 later this month. The problem isn't rates. It's a lack of confidence because nobody knows how much of this crap is floating around and who is on the hook for the losses. Now it looks like it might be spreading to the commerical market. I've been hearing about a "bubble" for the last umpteen years. First it was the "Asian Contagion" (currencies) then it was tech, now it's debt, manifesting itself in RE (so far!), but probably will spread. Fact is, the only "Bubble" is the bubble of cash & debt the fed has created. The bubble never really bursts, it just goes somewhere else, like commodities.