25bp rate cut may not go down well in the markets

The Fed is likely to cut interest rates by 25bp at next week’s FOMC meeting. Despite the stronger-than-expected GDP data released on Friday, however, fed funds futures still put the odds of a larger 50bp cut at close to 20%. The upshot is that, after a week when the ECB disappointed the markets, the Fed risks prompting a similar reaction, particularly if one or more hawks dissent.

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