After Fed vice chairman Donald Kohn spoke on Wednesday, investors bet more and more that the Fed Funds Rate would be cut once again at the December 11th FOMC meeting. We checked in with our trusty prediction market site, Intrade, to see where traders are currently putting their money in regards to the Fed Funds Rate. Currently, the contract for the Fed Funds Rate to be on or over 4.50% (the current rate) at the end of 2007 is trading at 20, meaning the odds for the Fed to leave rates at 4.50% at the next meeting are 20%. The contract for the Fed Funds Rate to be on or over 4.25% at the end of 2007 is trading at 85, putting the odds of a 50 basis point cut at 15%. If you don't think the Fed will cut by 50 bps, you can buy the contract by putting up 85 cents to end up with $1 if you're right.
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