The U.S. Federal Reserve is likely to continue to cut benchmark short-term interest rates by another quarter-point Tuesday, but in the view of some economists and analysts, it would not be totally unreasonable for the Fed to implement a half-point cut.Economist David H. Wang told BloggingStocks that recent Fed data "seems to be indicating a clear risk of a recession, which is the argument for a 50-basis point [half-point] cut."
Wang noted that while the futures market is pricing in two more 25 basis-point cuts at the Fed's January and March 2008 meetings, and also pricing in 100% odds of a 25 basis-point cut and 28% odds of a 50-basis point cut Tuesday, recent negative economic news/data points may weigh on the Fed on Tuesday, and perhaps carry the day, producing a half-point cut.
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