Chinese Español Sun, 20 Jul 2008
 head-search-back
News Calendar Charts Currency Rooms Forum DailyFX Plus Sign In

advertisement

The Fed Is Expected to Cut the Fed Funds Rate by 25 bps. Will it Be Too Late Too Little?

Wednesday, 02 January 2008 16:58:12 GMT

Printer Friendly | Email Article | RSS | Previous articles
Written by Antonio Sousa, Quantitative Strategies Analyst
The Federal Reserve is expected to cut the Fed Funds rate by 25 bps when the FOMC holds its next meeting in January 30, 2008. Traders are pricing in as much as 99 percent probability of a 25 bps rate cut to 4 percent and 26 percent chance for a 50 bps rate cut to 3.75 percent, according to short term Fed Funds futures. In any case, this could be both too little and too late. Short term interbank lending rates remain well above government bond yields of similar maturity and what the market needs is more transparency regarding the true amount of the losses related with the U.S. subprime market collapse. In fact, despite the recent easing on financial conditions boosted by repeated injections of liquidity by the world’s most powerful central banks, confidence among traders in all the measures adopted by central banks to fight the credit crunch remains in short supply.

 

Be sure to join DailyFX Analysts in discussing the Watch What the Fed Watches latest report in the DailyFX Forex Forum

Fed1

fed2

Fed3

 

< Prev    Next > [ Back ]