(March 19 – 12:30) – As the debate rages over the size of an expected rate cut by the U.S. Federal Reserve Board tomorrow, economists keep stretching their expectations.

Most economists, including BMO Nesbitt Burns chief economist Sherry Cooper, are expecting the Fed will produce a 50 basis point cut tomorrow. Others, such as CIBC World Markets, see the Fed leaning toward a 75 bps chop.

Now that the market has comfortable convinced itself the cut will either by 50 bps or 75 bps, Deutsche Banc Alex Brown chief investment strategist Ed Yardeni is touting the possibility of a full 1% cut.

Yardeni notes that the Fed could be more aggressive because there’s a long interval until the next formal rate decision. “I would not be surprised to see the Federal Open Market Committee lower the federal funds rate by 100 basis points at the March 20 meeting,” he says, noting, “Wishful thinking perhaps, but if the committee does less, they risk having to cut again between meetings. The next meeting is May 15!”

Yardeni remains committed to the idea that both the U.S. economy and corporate profits can expect a V-shaped bounce from current levels. More cautious economists see a U-shaped recovery, while some outright gloom merchants predict an L-shaped long-running slowdown.

“Of course, a worsening profits recession could certainly worsen the economic outlook as companies scramble to cut their costs by reducing payrolls and capital spending,” says Yardeni. “The offset should be another significant round of credit easing by the monetary authorities to reverse the slide in profits and economic growth,” he notes.