Bernanke is, to use technical jargon, an asshole, so pick the most rational course, and then assume he'll do the opposite. With that assumption, he never fails to disappoint.
I find it interesting how many people are voting for a cut. Yesterday afternoon I believe it was 0-12-12-2 Cut is now up to 7. hmmmm...
I agree that whatever the next move is, it will be a disappointment. Either the financials will get hurt (if Fed Funds rate is increased) or oil will not fall (if Fed cuts rates). In the last 12 months, on three separate occasions the Fed has stepped in and reacted to financial markets (what happened to only looking at growth and inflation?) In August 2007, they cut the discount rate in response to a declining stockmarket. They did the same again in January 2008. Then in March 2008 they bailed out an overleveraged investment bank. Given that I think the stockmarket is going lower, I think they will be cutting rates by the end of the year in response to plunging equities, possibly as soon as the September meeting. They cut twice already in response to stockmarket declines, and you can be confident that they'll do it again.
Once the Fed is happy the banks are stable they will raise and continue to raise slowly but steadily. There will be a sell off in the markets [a final shift in wealth between weak and strong hands] that will probably mark the time to go long again. Watch for oil to come down closer to the election.. Oil is the one thing that George W really knows something about.