Will the Fed really cut rates in June?

Rightly or wrongly, a lot of people are taking Greenspan's comments on the "possibility" of recession by the end of the year as hard gospel and are now betting on a Fed rate cut in June.

As of this moment, the fed funds futures contract price for July suggests a 62% chance for a cut at the June FOMC meeting. The price of the June contract suggests a 26% chance of a cut at the May meeting. The April contract suggests a 4% chance of a cut at the March meeting. The September contract suggests a 100% chance of a cut at the August meeting plus a 24% chance of a second cut by the August meeting as well.

All of this is subject to change on a moment's notice. I suspect that within a few weeks the odds of a cut in June will be back well under 50% and the odds for August will also be back under 50%.

So, my own answer to the question of whether the Fed will cut interest rates by June (or August) is a resounding: No.

-- Jack Krupansky