Fed cut expected to be quarter-point

Dec. 10, 2007 at 5:40 PM
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WASHINGTON, Dec. 10 (UPI) -- The U.S. Federal Reserve's expected interest-rate cut will be smaller than some on Wall Street want, Chicago futures market traders said.

The odds are 76 percent to 24 percent the cut will likely be a quarter-point rather than a half, said the Chicago Board of Trade futures market, in which investors bet on upcoming Fed actions.

A week ago the chances were 60 percent and 40 percent, respectively, traders said.

Chairman Ben Bernanke and his colleagues are widely expected to cut their target for short-term interest rates, which influence borrowing costs economywide, when they meet in Washington Tuesday.

Despite the odds, "The debate should be fierce" at the Fed meeting, Joel Naroff of Naroff Economic Advisers Inc. told USA Today.

If the central bank does cut rates, the move would be the third in three meetings and would lower the target rate to 4.25 percent from 4.5 percent, the lowest since March 2006.

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