A 50bp Federal Reserve rate cut coming today? History says ‘No’.

A snippet via Seema Shah, chief global strategist at Principal Asset Management:

• “Since the late 1980s…25-basis-point cuts have become the norm, and 50 basis points have been the exception.”
• Only two rate-cutting cycles have begun with cuts greater than 25 basis points: January 2001, amid the dot-com bubble, and September 2007 during the sub-prime mortgage collapse
• Both of those periods stood out, “characterized by concerns around severe asset price bubbles and financial systemic risk.”

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Principal Financial Group is a US investment management and insurance company.

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I posted earlier:

• Most analysts expect a 25bp interest rate cut from the Federal Reserve today

Market pricing is in favour of 50, and I have seen plenty of reliable finance people arguing in good faith for 50. FWIW I am looking for 25 and have been for some time.

This article was written by Eamonn Sheridan at www.forexlive.com.