Fed to raise to 6% this year?

I'm "on the bubble" on this one (pun intended). They must be seeing the carnage in the housing market, and that they've at least stopped the rampant housing speculation, although if they're looking for depreciation, 6% gets us there faster.

But $74 a barrel gas, still-high commodity prices, and still-robust business profits, combined with a weakening dollar which is creating higher import prices and thus still unchecked-inflation, mix it all together and what's Ben to do? Raise? Halt? Lower?

Complicating all of this is a very important mid-term election, and if you go back and study Fed policy and politics, the central bank tends to be dovish on rate hikes in the months leading up to elections as to favor the incumbent party.

Thoughts and predictions?

U.S. stocks are threatened by predictions the Federal Reserve will raise its benchmark overnight lending rate as high as 6 percent.

Barclays Capital Inc. forecast the Fed's target rate will reach 6 percent by the end of the year. JPMorgan Chase & Co. and Credit Suisse Group made similar calls for next year. Last week, policy makers lifted the rate to 5.25 percent, the 17th straight increase.

There have been eight time periods since the 1960s when the so-called federal funds rate was 6 percent or higher. The latest began in March 2000, the start of a three-year bear market for stocks. Prices dropped in three more periods and had losses during two others.

``Six percent would make us decide to pull back our equity allocation,'' now about 50 percent, said Peter Wall, who helps oversee about $80 billion as chief investment strategist at JPMorgan Private Client Services in New York. The rate ``would increase the risk of recession in 2007.''