The biggest debate in the currency markets at the moment surrounds what the Federal Reserve will do on September 18th. We expect the upcoming interest rate decision to create a great volatility in the financial markets because with less than a week to go, economists and traders have yet to reach a consensus on how much the Federal Reserve will lower interest rates, if at all. According to the 117 economists surveyed by Bloomberg, 69 percent expect a quarter point cut, but according to a DailyFX Poll of 255 voters, only 48 percent expect the Fed to move. It has become painfully obvious that Federal Reserve Chairman Ben Bernanke has encountered the “first year curse,� where new Fed Chairman are faced with a major financial crisis shortly after taking office. The recent rally in the global equity markets and the sell-off in the US dollar indicate that some type of easing is expected, but the question is still, “do current conditions and future outlooks warrant a 25 or 50 basis point rate cut?� In our opinion, this is really a question of whether the Fed chooses to deal with the problems in the US economy proactive or reactively. A 25bp cut would be putting be a band aid on the subprime and credit crisis in hopes that the problem does not exacerbate while a 50bp cut would represent an aggressive move by the Federal Reserve to tackle the problem before it worsens.