Recently Departed Fed Honcho Sees Rate Cuts Soon

Everyone remotely associated with the market is wondering what's going on inside the cloistered confines of the Federal Reserve's Federal Open Market Committee . One market watcher, until very recently a Fed insider, says get ready for substantial moves very soon.

The FOMC announced that it was holding pat on rates while indicating rate cuts are coming. Moments earlier, Michael J. Prell, the Fed's former director of research and chief domestic economic forecaster, said that even if they don't cut rates today, the next few months will see lower interest rates.

When last we checked in with Prell in early September, he was worried about the possibility that a rising stock market and higher energy prices might force the Fed to raise interest rates. Today, obviously his thinking has changed a bit in light of the recent signs of economic slowing and the further bursting of the Nasdaq stock bubble. What is Prell, who is now an independent economic consultant in Arlington, Va., after leaving the Fed earlier this year, thinking about on FOMC Day? Read on. ...