The Federal Open Market Committee is expected to announce a third consecutive cut in the federal funds rate today. Equities were up early, but have fallen to near their open in advance of the announcement which will come later today. What will the Fed do?
It would seem that the Fed is anticipating a slowdown in economic growth. The global economy is working through the problems in the credit markets. Furthermore, the meltdown in securities backed by subprime and adjustable-rate mortgages (ARMs) creates these problems. In addition, the anticipated impact of expected significant declines in home prices (US and UK) created these problems.