The waiting has begun.

The Federal Open Market Committee (FOMC), the policy-setting arm of the central bank, is expected to announce its monetary strategy for the next six weeks at 2:15 p.m. ET.  Fed Chairman Bernanke and his fellow members of the committee are expected to vote unanimously for a 50 basis-point cut to their benchmark fed fund rate (the rate of interest banks pay to borrow overnight funds from each other).  Mortgage investors have fully priced in expectations for a 50 basis-point cut from the Fed at today's meeting - probably rendering the actual event as nothing more than ceremonial in terms of its impact on the current level of mortgage interest rates.

There are some who believe the Fed will take a more aggressive posture, and cut short-term interest rates by 75 basis-points, which would take the benchmark fed fund into territory not visited since 1958.  In my judgment, such a move would likely accomplish little as it would simply get lost in the vast array of other lending and liquidity facilities the Fed has deployed in the last six weeks.  A 25-basis point rate cut would probably look like nothing more that silly, meaningless tinkering and a stand-pat position would make the Fed appear to be out-of-touch with current market conditions.  All reasonable outcomes considered -- the probabilities strongly favor a 50 basis-point short-term rate cut.

The post-meeting statement that will follow the Fed's monetary policy decision will probably be a virtual duplicate of the statement following the Fed's 50-basis-point rate cut on October 8^th.  The message from the committee members will likely acknowledge the big crimp consumer spending will likely put on the coming quarters' economic growth and will clearly define the downgrade in the Fed's inflation concerns by giving a nod to falling commodity prices and mounting weakness through every sector of the economy.

Today's conforming 30 year fixed mortgage is at 6.50%.