Is the Fed going to cut rates?

The U.S. Federal Reserve is expected to chart a new course on Tuesday and cut benchmark interest rates for the first time since mid-2003 to protect the economy from a housing downturn and jittery credit markets.

Fed Chairman Ben Bernanke said late last month the central bank stood ready to act as necessary to limit damage to the broader economy from the housing slump and turbulence in credit markets nervous about a wave of mortgage delinquencies.

Bernanke’s remarks were seen as opening the door to lower rates and a report on August 7 showing the economy shed jobs in August for the first time in four years was seen as cementing the case for cutting overnight borrowing costs from their current 5.25 percent level.

Funny. Have you noticed the markets don’t react as sharply when Bernanke opens his mouth? When Greenspan was the chairman he could burp and send the markets reeling.

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