One and Done

The Fed meets again today and tomorrow. According to the futures market, there’s about a 70% chance that the Fed will cut by 25 basis points tomorrow. That would bring rates down to 2%. There’s close to a 30% chance that the Fed won’t make any cut.
Assuming the Fed cuts by 25 points, the futures market believes there’s about a 55% chance of no further action at their June meeting. There’s about a 10% chance of another 25-point cut, and there’s close to a 30% chance of no cut at either meeting.
Interestingly, if the Fed stops at 2%, this will mark the third straight easing cycle where the Fed stopped at a round number. In the early-90s, they went down to 3%, and a few years ago, they went down to 1%.

Posted by on April 29th, 2008 at 1:43 pm

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