A Fed Without Direction

By Douglas A. McIntyre Published Jan 6, 6:42AM EST

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One of the key members of the Fed admits that there is a great deal of debate within the body about cutting rates. Based on a speech by the Fed’s vice chairman Donald Kohn, Reuters points out that "hints at a split between policy-makers that critics find worrisome, because it raises doubts about how far the Fed will be prepared to cut interest rates to shield the economy from a slumping housing market, increasing the odds of a recession."

In other words, it is not clear whether concerns about inflation or recession will govern the actions by the Fed in the early parts of 2008.

If the Fed leans toward viewing inflation as the greater of two evils, the half point cut that Wall St. expects later in the month may end up being only a quarter point. No one can guess what that will do to the market, It would be hard to quarrel with the fact that it could push the Dow down 250 to 500 points, at least temporarily. Some sectors like housing and automotive could fall even further.

Debate at the Fed may have a modest effect on the economy, but it could be the undoing of the stock market.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.