By James Langton

(March 19 – 07:15 ET) – This week promises to be a busy one on the economic front, with the decision on interest rates due Tuesday sure to the centre of attention.

The market is currently pricing in a 50 basis point cut on Tuesday, but momentum is building for a 75 bps move. CIBC World Markets says that it expects to see the Fed go for a full 75 bps cut on Tuesday. Merrill Lynch also expects a 75 bps cut, noting, “The Fed doesn’t want to give the impression it’s bailing out the equity market, but confidence is at risk of cracking. Market declines have wiped out over $3 trillion of household net worth, slowing consumer spending and contributing to the tech pullback. In short, whatever its qualms, the Fed should act aggressively. It is the only competent central bank among the big three.”

BMO Nesbitt Burns is more cautious, expecting just a 50 bps cut. “We believe an aggressive move would be welcome, but the markets may be weighting more heavily the turmoil in equity prices than the Fed will,” says BMO. It notes that, “Statistical support is mixed for such a cut. And the Fed has not signaled that more than 50 basis points is in the offing.” Regardless of the Fed’s move on Tuesday, BMO says that further “substantial Fed easing will be forthcoming”.

The Fed’s decision on rates will be the big item on Tuesday, but the U.S. trade balance is also due out that day. It is forecast to remain unchanged. In Canada, we also get our trade numbers, and in the afternoon, Bank of Canada governor David Dodge will speaksto the Montreal Society of Financial Analysts. Dodge’s comments are scheduled for 13:00 ET. The Fed decision is due at 14:15 ET.

On Wednesday, Consumer Price Index data is due out in Canada and in the U.S. Economists are calling for Canada’s CPI to slip to 2.7%, 1.8% on the core. Moderate readings are also expected in the U.S. CIBC says, “A benign CPI report on Wednesday will provide reassurance that January’s stronger-than-expected headline and core were both abberational.” Inflation is hardly a consideration in the U.S. at this point.

Fed chair Alan Greenspan will have a chance to explain Tuesday’s decision in a speech Wednesday to the Columbia School of Journalism. The talk is officially closed, but traders will no doubt be scrambling for tidbits.

On Thursday, Newfoundland delivers its budget. And then on Friday, manufacturing shipments numbers are due.

The earnings schedule is rather quiet next week. AGF Management Ltd. is due to deliver numbers on Monday. Alimentation Couche-Tard Inc. reports Tuesday, along with Leroux Steel and Rio Alto Exploration. On Wednesday, Courage Energy and Penn West Petroleum report. Mark’s Work Wearhouse and TVA Group Ltd. are due for Thursday. Ensign Resource Service Group and Forzani Group Ltd. round out the reporting on Friday.