Ben Bernanke Loves Surprises
Yesterday on CNBC I expressed my strong surprise that the debate about Fed rates cuts today made it seem like it was entirely a matter of 25 vs. 50 basis points, with the latter more or less a certainty. My view, as I said then, was that Bernanke is likely to do 25 points, but the no-cut option is considerably more likely than the market thinks. Why? Because Ben Bernanke loves surprises, and he doesn't want to be seen as the market's puppet.I see the WSJ has come to the same conclusion this morning:
The behavior of financial markets implies near certainty by investors of a quarter-point cut in the Fed's key short-term interest rate. But for policy makers, the decision is between the quarter-point reduction and no cut at all.1
