The 70% chance of a 50 basis points Fed Funds cut predicted by futures markets later on today looks, from a Taylor Rule perspective, aggressive. Such a cut (excluded from the above chart) would suggest the Fed is reasonably confident inflation will tail off from the December's 4.1% reading in line with consensus forecasts (of 3.5% next time tailing off to 2.3% by year end); or that this is no ordinary recession threat; or both.

Those numbers mean free money in real terms; and as one who, in the face of very mixed economic data, does not get the logic of a 75 bps cut followed a week later by the mooted 50 bps, it means, hopefully, that once whatever metrics the Fed is using improve rates can also go the other way as swiftly. Otherwise the longer term danger is of a cure worse than the illness.

The guiding principle of 'data-driven' appears a victim in all this. Economic data management is, above all, a means to an end not the end itself. When in due course judgement is passed on this Fed the board should hope it says vision was combined with humanity; that without chasing after popular but unwise measures in the short term it recognised the case for the greater good and, equally, regulatory reform. Those ends are what matter most and are partially within its remit.

Some additional data of relevance, released yesterday:

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