NEW YORK (Thomson Financial) - A 25 basis point rate cut in December was a certainty again after the release of the minutes from the Federal Reserve's last policy setting meeting, which indicated that nearly all of the voting members saw "substantial downside risks to the economic outlook."
December fed funds futures were down 0.01 at 95.675, which implied a 109% chance of that the Fed would lower its target for overnight rates by 25 basis points to 4.25%, and a 54% chance they would cut it to 4%.
Prior to the release of the minutes of the Federal Open Market Committee meeting, the December contract had hit an intraday low of 95.635, which implied only an 84% chance of a 25 basis point rate cut. Futures fell after the Financial Times reported that the Fed would indicate that it expected the U.S. economy to pull through the current economic rough patch and regain strength in 2008.
Late Monday, the odds of a 25 basis point cut was 115%.
The Fed's minutes said that "nearly all" of the voting members thought that monetary policy was "somewhat restrictive" partly because of tighter credit conditions, but indicated that the rate cut was a close call. The minutes suggested that the Fed was less concerned about inflation than about growth.
December fed funds futures were down 0.01 at 95.675, which implied a 109% chance of that the Fed would lower its target for overnight rates by 25 basis points to 4.25%, and a 54% chance they would cut it to 4%.
Prior to the release of the minutes of the Federal Open Market Committee meeting, the December contract had hit an intraday low of 95.635, which implied only an 84% chance of a 25 basis point rate cut. Futures fell after the Financial Times reported that the Fed would indicate that it expected the U.S. economy to pull through the current economic rough patch and regain strength in 2008.
Late Monday, the odds of a 25 basis point cut was 115%.
The Fed's minutes said that "nearly all" of the voting members thought that monetary policy was "somewhat restrictive" partly because of tighter credit conditions, but indicated that the rate cut was a close call. The minutes suggested that the Fed was less concerned about inflation than about growth.
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