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US Fed: Futures Price In A 96% Chance Of A Rate Cut - Are The Markets Wrong?
By DailyFX Updates | November 20, 2007
Many FOMC members have made a point of signaling no intention of cutting rates again in the near-term, as record high oil prices significantly raise inflation risks in the economy. However, the markets appear to be trying to force the bank’s hand as federal fund futures currently price in a 96 percent chance of a 25bp rate cut in December. With less than a month until Bernanke & Co. convene again, they are working the press overtime to convince investors that they don’t have to make policy more accommodative. Will the markets buy it and cut back speculation of a rate cut? Furthermore, can it revive the beleaguered US dollar? After Tuesday’s release of the October FOMC minutes, we may finally get our answer.
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