There is acually now dominating view that interest rates will be cut by March 2007 because the housing downturn is taking the whole conomy down with it. However, with the dollar decline, you have a corresponding increase in oil prices. And I think oil prices, not the housing market or recession, is what is going to drive the interest rate outlook for the US. It is simple that the Fed can afford to have a housing recession but it cannot afford $100 per barrel oil in this country. So my prediction for rates is that they will depend on oil prices.
