The most respected economists and market pundits have a saying: "Hold strong positions that are weakly held." Based on not only the Feds actions today, and based on the expectations of the Fed starting to drop rates in 2007, I have to start rethinking the economic expectations that I am having.
About 15 years ago, Japan had a real estate boom that crashed. That precipitated their central bank lowering interest rates to zero percent (the ZIRP after the real estate crash in Japan. I am starting to wonder if we are seeing the beginning of the same thing here. Is our central bank, the Federal Reserve, getting ready to cut interest rates in order to stave off the worst effects of the bursting of the real estate bubble?
My assumption has been that the Fed would keep raising rates to curb inflation. Now I am not so sure. Will lower fuel prices also act as a curb against inflation? If you are good at macroeconomics, I would like to hear from you. If you do comment, could you please let me know what school of macroeconomics you subscribe to (Keynesian, neo-Keynesian, Austrian or something else).