Fed’s meeting: “Equal” chances of cutting interest rates by 25 or 50 points

Interest rate futures trading on Friday indicated the possibility of the US Federal Reserve cutting interest rates during its meeting next Wednesday, with equal chances of cutting them by either 25 points or 50 points, as financial markets bet on increasing the chances of the US Central Bank moving more boldly.

But the possibility of cutting interest rates by a quarter of a percentage point at the Federal Reserve meeting next Tuesday and Wednesday is still the most likely scenario, albeit by a slight margin.

Interest rates are now ranging between 5.25 and 5.50%, and futures contracts linked to the Federal Reserve’s interest rate policy currently indicate a probability of about 47% that the US Central Bank will cut interest rates by half a percentage point, an increase from about 28% last Thursday, according to “Reuters”.

The market moves reflect increased bets by traders that the Federal Reserve may try to prevent a deterioration in the jobs market, rather than taking a slower approach of initially cutting interest rates smaller and waiting to see what happens.