USD, current rate: 1%, next decision: 12/19, expected: 0.25% cut.

That is right 0.75% fed funds rate. The Fed has pulled out all the stops and cut their own brakes. A target of 0% is a real possibility at this point.

EUR, current rate: 3.25%, next decision: 12/4, expected: 0.50% cut

Trichet said, at the last decision, the he did not exclude the possibility of another rate cut. Which is ECB speak for we look to cut next time. Of course the situation in the EZ is definitely supportive of a rate cut as inflation expectations continue to come down.

GBP, current rate: 3%, next decision: 12/4, expectation: 1.5% cut

The market consensus is for a 1% cut. However, the consensus has continually underestimated the willingness to cut by the BOE.

AUD current rate: 4.25%, next meeting: 2/2 , expectation: 0.50% cut

With the massive drop in commodities, Australia’s trade balance is in danger. As long as commodities remain at these levels rate cuts remain in place. However, a lot can happen in two months, so if commodities begin to move upwards, the odds of a rate cut become lower.

NZD current rate: 6.5%, next meeting: 12/3 , expectation: 1.5% cut

The RBNZ will no doubt be cutting this week. Their trade balance has continued to fall while domestically they were one of the first countries to officially enter a recession.

CAD current rate: 2.25%, next meeting: 12/9 , expectation: 0.25% cut.

The Canadian economy has held up relatively strong. They have had three months of positive job numbers, however their retail numbers have not held up so well and their exports are down. However, as the rest of the world sees their economies weaken so does Canada.
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David Leal
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