Just saw this headline on marketwatch.com
A week ago I would have said a 50bps cut to the Fed Funds rate was the most likely outcome of Tuesday's Fed meeting. However in light of recent events such as the demise of Bear Stearns and the Federal Reserve making moves that haven't been seen since the great depression the odds of the Fed doing more than 50bps have risen substantially. In fact a 100bps cut is fully priced into the Fed futures.Fed fund futures suggest cut to 1.75% a small possibility
The rise in Fed fund futures Monday morning not only suggests that a one-percentage-point cut to 2% in the Fed funds rate is fully priced in, but that there's a slight chance of the Fed cutting its base rate to 1.75%. The April Fed fund futures contract rose to 98.03.
So whaddaya reckon? Will the Fed warm up the helicopter or will they wake up to themselves and stop trying to fix the problem with the same medicine that created it?