COMMENTARY | COLUMNISTS | GEORGE CHAMBERLIN

George Chamberlin's Money in the Morning

Will they or won't they? That is the question being debated by financial analysts, investors, consumers and others this morning as we wait for the announcement at 11 a.m. Pacific time this morning regarding the economy and interest rates. There are legitimate arguments on both sides of the debate over whether or not the time has finally arrived to begin the process of raising short-term interest rates to make a preemptive strike against phantom inflation. Regardless of the decision, we will learn a lot more than what is included in the formal statement when chair Janet Yellen holds a press briefing about a half hour after the announcement is released.

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Zane Brown, the fixed income strategist at Lord Abbett, has some advice for the Fed. "Is there a way for the Fed to tighten without spooking the markets? One potential solution would be to start with a mathematical baby step, specifically, a rate hike of one-eighth of a percentage point instead of the Fed's customary quarter-point increment. Call it a "pieces of eight" strategy for policy normalization. There is a historical precedent for such a move. In 1985, 1986 and 1988 the Fed adjusted policy by one-eighth of a percent several times, with interest rates substantially higher than they are now."

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Surprisingly, the stock market has rallied ahead of today's announcement. Yesterday's 140-point gain brought the two-day rally to nearly 400 points in the Dow industrials. It is a bit unusual for stocks to move substantially one way or the other right before the release of the policy statement. Makes you wonder if somebody knows something.

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Here's another example of how the business media gets a story completely wrong. The Commerce Department reported this morning new home construction activity declined by 3 percent in August. The Associated Press said the decline is "a possible sign that the housing market may be leveling off after accelerating for much of the year." In fact, the slowdown in construction activity means the housing market, if anything, will continue to see home prices rising. Remember, it is all about supply and demand. The demand remains very strong but, without building more homes, the supply will remain limited. Perhaps more important, the report said building permits, a sign of future home construction, rose by 3.5 percent last month.

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Speaking of housing, a new report from Zillow counters one of the widest-held beliefs out there: student debt is keeping millennials from buying homes. Research finds student debt is only a deterrent if the borrowers fail to graduate. Bottom line, getting a bachelor's, master's, or doctorate degree, regardless of debt, increases the chance people will buy a home.

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The 70 best men's professional golfers tee it up today for the next step in the FedEx Cup Championship. They will be playing in the BMW tournament near Chicago with the biggest crowds surely following the threesome of Rickie Fowler, Jordan Spieth and Jason Day. Former Poway resident Charley Hoffman with be playing in a group with another crowd favorite, Bubba Watson.

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