Wall Street firms see Fed cutting at least 75 bps
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, feds, rate cuts March 18th, 2008NEW YORK (Reuters) - Nearly all U.S. primary dealers now believe in the wake of Bear Stearns’ near collapse that the Federal Reserve will cut key short-term rates by at least three-quarters of a percentage point on Tuesday.
Earlier this month, they had believed a half-point cut would suffice to help keep the economy from spiraling into a recession.
Seven of the 20 Wall Street firms, which do business directly with the Fed, predict that the U.S. central bank will lower its target rate on federal funds by a full point to 2.00 percent from 3.00 percent. If that happens, it would be the first time in more than 25 years since the Fed made such a steep rate cut.
The bond dealers forecasting such a bold rate cut include Banc of America Securities, Citigroup, Deutsche Bank, Goldman Sachs, HSBC Securities and UBS Securities.
Heightened jitters from the liquidity crisis at Bear Stearns — whose own economists are looking for a full-point cut — have raised expectations for the Fed to aggressively reduce interest rates to complement the array of inventive moves to combat a corrosive global credit crunch.
