Stay away from danger

They did it in 1998 and 2001. When Russia and Asia got into trouble and when terrorists attacked, central banks helped with rate cuts. Investors expect a repeat performance in 2007. In the US, the futures market is now pricing in almost two rate cuts this year, while euro futures say that the pre-announced September rate increase won’t occur. But the world would be safer in the longer term if the authorities broke with the historical precedent. Investors argue that rate relief would counteract t...