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Four regional Fed bank presidents, speaking separately on Thursday, said they do not believe a rate cut is required at this time -- though their assessments of the effects of the credit crunch on the broader economy appear to differ. Kansas City Fed President Thomas Hoenig and Atlanta Fed President Dennis Lockhart said they do not see signs of a spillover, while St. Louis Fed President William Poole said "the probability of recession is higher than it used to be" and Dallas Fed President Richard Fisher said it is not yet clear whether or not the financial turmoil is affecting the economy at large. Hoenig and Poole are voters on the FOMC this year; Fisher will vote on rates in 2008 and Lockhart in 2009. The FOMC will meet September 18, and the market has priced in an expectation that it will lower the benchmark fed-funds rate at least a quarter point from the current 5.25%. Fed Chair Ben Bernanke said August 30 that although the Fed will "act as needed to limit the adverse effects on the broader economy" of the credit crisis, "it is not the responsibility of the Federal Reserve...to protect lenders and investors from the consequences of their financial decisions." That view was explicitly endorsed Thursday by Fisher, who said, "The job of the Federal Reserve is not to bail out risk takers. You're a big boy, you take risks, you bear the consequences." On Friday morning, the non-farm payrolls report will be released, with economists forecasting an increase of about 100,000 jobs. "The employment data is going to be big this week," says Ben Lichtenstein, president of Tradersaudio.com. "It’s a missing piece of the puzzle."

Sources: Bloomberg, Reuters, CNBC, MarketWatch I, II, III
Commentary: A Careful Look At The Recession ScareWill Weak Employment Figures Lead to More Rate Cuts?A Fed Cut Is Priced In; No Cut Will Trigger A SelloffHousing, Credit Weakness to Further Test U.S. Economy -- OECD
Stocks/ETFs to watch: SPY, DIA, AGG, SHY

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Source: Four Fed Presidents: No Rate Cut Needed Now