FT.com / Capital markets - Quarter-point US rate cut fully priced in

FT.com / Capital markets - Quarter-point US rate cut fully priced in: "Quarter-point US rate cut fully priced in By Michael Mackenzie and Richard Beales in New York Published: August 9 2007 19:12 | Last updated: August 9 2007 21:55 Investors moved on Thursday to fully price in a quarter percentage point cut in US interest rates in the next two months in reaction to the turmoil in financial markets. Expectations shifted sharply from earlier in the week after a US Federal Reserve meeting on Tuesday that reaffirmed its existing monetary policy focus on inflation risks. After that meeting, earlier expectations of a cut had once again receded. European markets are also now pricing in a reduced chance of an interest rate rise from the European Central next month, in spite of the bank’s recent tightening bias. Neither the ECB nor the Fed has yet hinted at the possibility of rate cuts in the coming months. But dealers said further losses associated with US subprime mortgages and structured credit instruments could force rate cuts by central banks."