Your dead on. It’s coming into an election year. The GOP will want to band aid the economy and I will predict they will cut the rates again.
My take on it is this. Leave the rates alone and allow the recession now. I am now really very seriously concerned with an economic collapse in early 2009. Once the Bejjing Olympics are done with except China to liquidate all their entire Treasury Bond position. They know how to make more money elsewhere. Oil, credit crunch, healthcare costs, a sliding real estate market are beginning to take a toll on consumers and this is just the start of the real pain. Having Hillary win the election due to a bad economy wouldn’t be pretty but I don’t think band-aiding it now is going to make all that much difference come election time.
I hope I’m wrong.