The Fed Stuck between a Rock and a Hard Place..

So what is the Fed to do. If they cut rates today the market can perceive that they are truly worried about this Sub-Prime mess and really hit it hard. If they say nothing they can be perceived as being "out of touch" and ignoring a problem.

I am of the opinion that they will hold rates steady, and say very little if anything at all. I feel that the Fed is still very concerned about inflation (right or wrong it has been a consistent theme)and that they view this Sub Prime issue as an isolated event which should be contained. I would not be surprised for a statement such as "We are keeping a close eye on the situation" but any cut in rates now (25bp would do very little you would need 50bp at a minimum)would be viewed as a panic.

Good Luck and Good Forex Trading......