C. Kilander,
First, if I was a Fed governor (now *there's* a Star Trek episode) I would have no interest in lowering rates. There is still a great deal of risk in the American economy and a great deal of speculative energy left. That should be reflected in interest rates. On some level, YHOO at $130 and all the other stock price inflation *is* inflation. Stock buyers are (effectively) extending credit in the equity markets (not to actual business firms, by and large, but to sellers of stock) on an uneconomic basis. They are doing so on the basis of valuation models (like Abby Cohen's) that justify excessive prices on low interest rates. Furthermore, we are simply hurting Asian currencies by weakening the dollar and Japan simply cannot go any lower to compete. Moreover, if there is indeed a crisis heading towards our borders, it might be wise to have a half-dozen fifty basis-point moves in the arsenal before we get to "liquidity trap" interest levels.
As for Brazil, I look at Mexico a few years ago. Everybody knew (or should have known) that the P.R.I. had a history of devaluing the currency shortly after an election - after doing everything possible to pump it up in the months preceding. Then this last time the Americans (somehow) get taken by surprise by the practice and peso punters get a nice, fat bailout. If you're Cardozo, that has to sound like a good racket right now. I'd be willing to bet a Brahma beer that Cardozo will devalue after the election.
peace