The Fed’s rate at zero? It’s no longer a far-fetched idea

Just a day after the Federal Reserve dropped its key short-term interest rate to 1% — matching the generational low reached in 2003-04 — the betting is intensifying on another cut.

Trading in futures contracts on the federal funds rate, the Fed’s benchmark, implies a 51.4% probability that the central bank will slash the rate to 0.50% on or before its next meeting on Dec. 16, according to Bloomberg News data.

On Wednesday, the probability of a cut to 0.50% was 32%.

At a minimum, the futures market expects the Fed to take its rate down to 0.75% on Dec. 16.

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