Is US Fed Likely To Cut Interest Rates?

U.S. Federal Reserve is expected to reduce interest rates today, in order to further increase banking liquidity, inter-bank lending and unfreeze credit markets. Question is what quantum of interest rate cut will be considered optimum?

Yesterday with the anticipation of further rate cuts, U.S markets underwent a strong rebound rally by rising almost a whopping 11%! The rally certainly took many by surprise! A "short squeeze" occurred when traders with short positions, betting on falling stocks, were forced to buy to avert heavy losses. The rally occurred despite U.S. consumer confidence index plummeted to a record low of 38.0, down from 61.4 in September, signaling more retrenchment by consumers.

Could this be a major turnaround or yet another sucker's rally?

Common sense tells me that the economy and consumer confidence will take a while to move its course and enable a sustainable recovery, even with a significant interest rate reduction.

The consensus rate cut is 50 basis point, bringing Fed interest rate to 1.0%.