Now that inflation is accelerating, why should the Fed. keep cutting rates....?

Are they not just setting the stage for a even bigger "bubble break" later....?

That's the ultimate arguement against cutting rates and why the Fed has not been more aggressive than it has been. Without rate cuts it looks like we have a very good chance for a recession, so it is trying to balance between the two issues.

I think that partially explains why they elected to only do a quarter point decrease last time, though the market had hoped for (some expected) another half point reduction.

Since the lowering of the rate decreases the cost of borrowing, it should also help alleviate some of the credit crunch in the US. That has taken the driver's seat of concerns the FED has for the US Economy. If the credit crisis isn't addressed first, it will very likely lead us to recession.

We only have two data points, both from the month of November, that suggest accelerating inflation. This is pretty weak evidence, but it's not nothin.

Also, I think that the Fed is quite concerned about the fall of the dollar relative to the Euro. The dollar has reversed & is now moving up. This will help curb the rise in commodities like oil & others. This in turn may prevent any further increase in inflation rates.