In recent days, market pundits have excitedly talked about the prospects of the Federal Reserve getting so dovish that it would be willing to make a bold statement with a rate cut of 50 basis points for the July 31st announcement on monetary policy. Such a move would be quite dramatic given the Fed has trained the market to expect moves in increments of 25 basis points.<\/p>\n\n\n\n
After the Federal Reserve announced its decision on monetary polic<\/a>y on June 19th, the Fed Futures priced in the odds of a cut of 50 basis points<\/a> at 33.5%. In just three more trading days, the odds rushed upward as high as 42.5% on June 24th. These levels proved so premature that St. Louis Federal Reserve Bank President James Bullard, the very man who dissented with the Fed decision not to cut at all last week, burst the myth of the double-barreled rate cut for July. In a Bloomberg TV interview,<\/a> Bullard reaffirmed that he thinks the Fed should cut rates by 25 basis points, but he did not see the need for 50.<\/p>\n\n\n\n