Futures Price Out Another .75 Percent Rate Cut

Wall Street is now speculating that the Federal Reserve will lower interest rates another .75 percent next week on the 30th.

Continued selloff in the stock market and the drop on bond yields suggest that the Federal Reserve still have some work ahead of themselves to get the economy back into shape. Late Tuesday the futures market were pricing in a 90 percent chance of a half point rate cut and a 60 percent chance of a three quarter point cut next week.

“Plainly the Fed realized that to try to stay ahead of the market they had to act immediately. That is the positive reading of the action,” said Alan Ruskin, chief international strategist at RBS Greenwich Capital in Greenwich, Connecticut. “The negative viewpoint is that it smacks of panic.”

“The Fed is very, very, very worried,” said John Tierney, an analyst at Deutsche Bank in New York.

The .75 percent rate cut that happened earlier this week was the first in between regularly scheduled Federal Reserve meetings since September 17th 2001 which was the first day the market reopened after the September 11th terrorist attacks.

To read more about Wall street now betting on another 3/4 point cut head on over to CNBC.