There is a 75 % probability of a 0.25 % rate cut and a 25 % probability of a 0.50 % rate cut by the Federal Reserve at the meeting ending today, according to Wolfteam Ltd.'s projections and estimates.
The Federal Reserve interest rate announcement is pending in little more than 2 hours.
Actually, a 0.50 % decrease of the Federal Funds Rate by the Federal Reserve could provide a much greater jolt to financial markets than a 0.25 % interest rate cut. Actually, the effect could be very negative, because a 0.50 % cut could signal that the Federal Reserve is more worried about the economy than one could tell by recent Fed speak. It could clearly show that the Federal Reserve sees strong negative underwater currents in both the US and global economy.
And since 0.50 % rate cut would most probably would not be the end of the road in this tightening cycle. The signaled number of further interest rate cuts could foretell a much larger slowdown of the US economy, then currently expected and built into Wall Street research analysts' models.
A 0.25 % interest rate cut is much more incorporated into Wall Street macro-economists, economists and equity research analysts and investors' globally models and expectations and would be taken in stride by the markets, according to Wolfteam Ltd.'s projections and estimates.
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