Published on Mon, Jan 21, 2008 at 14:58 | Source : CNBC-TV18
Updated at Tue, Jan 22, 2008 at 10:24
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Fed likely to cut rates by 75 bps
If you look at Fed Futures, which is a very key indicator to look at, there is a 72% probability that it is going to be a 75-basis rate cut, a CNBC-TV18 analyst said. Next week, US President George W Bush is going to say what his plans are. On Friday, he said they are going to unveil a package for the entire economy to bring it back.
There are two key events, which investors should watch out for. One is the FOMC meet on January 30, where we will come to know how much the Fed is going to cut rates. Second, US President George W Bush is going to say what his plans are next week. On Friday, he said they are going to unveil a package for the entire economy to bring it back. But market players are expecting a tax rebate of USD 800 for an individual and about USD 1,600 for a couple up to a salary range of about USD 85,000. Market players are expecting more than a tax rebate, which Bush is expected to give.
If you look at 2001, a similar package was given. About USD 38 billion was pumped into the economy. This actually turned out at around USD 300 for an individual and USD 600 for a couple. It was a positive sign because consumption spending has increased by almost 0.8% in Q3 and 0.6% in Q4, a similar kind of thing might happen also.
If you look at Fed Futures, which is a very key indicator to look at, there is a 72% probability that it is going to be a 75-basis rate cut.
