Serge, election year politics in the US create very strange situations. The fed is being very "non partisan" right now by doing nothing. They are sending out very mixed messages, including "don't expect to do anything before fall"... these guys don't want to be seen playing favorites for anyone!
If they raised rates now (half point or more at one time) there would be some short term negative financial impact (exchange rates, return on bonds, government borrowing, etc) but would probably not be all that negative (because of the current historical low rates). However, if it had even a slight effect, it could be seen as an attempt to undermine Bushboy and put him out of office.
As a result, unless there is a overwhelming need in either direction, I would not expect to see motion before mid november. After that you folks are signed up for 4 year of whoever is in there, and the fed will have no issue shitting on their parades early in the game.
I am starting to suspect that there will be some hush hush international deal made to have interest rates rise up in all g8 countries a bit, to give everyone some breathing room.... maybe 2005.
Alex
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