Another 75
[?]
Submitted by Econbrowser
How much ammo is left in that fed funds gun?
Interesting reaction yesterday at the Chicago Board of Trade to the Fed’s decision to reduce its target for the fed funds rate by 75 basis points to a new objective of 2.25%. On Monday, the fed funds futures contract had been anticipating an average funds rate of 1.95% for April, consistent for example with a 100 basis point cut yesterday and some weakness prior to another 25 bp cut at the April 29/30 FOMC meeting. However, after yesterday’s meeting, the implied April interest rate shot up 20 basis points to 2.15%. The Fed made a big cut, and the market was surprised that it wasn’t even bigger.
