US Fed set to cut rates to 5% by mid-year
Rates went on hold at the next meeting in August, bringing to an end a run of 17 quarter-point interest rate rises, thus taking rates up from 1% in June 2004. Since the Fed went on hold last August, it has maintained a bias towards higher rates, reflecting its concerns about the risks of higher inflation in the US economy.
Financial markets believe the Fed will maintain its interest rate stance until closer to the end of 2007, with a cut of no more than 0.25% priced in at this point.
