Citigroup Inc. to Goldman Sachs Group Inc. said yesterday the Federal Reserve's plan to inject $200 billion into the
banking system may fail to break the freeze in money-market lending. Traders bet the Fed will cut its rate as much as 0.75
percentage point on March 18 to avert a recession. The likelihood of a reduction to 2.25 percent was 76 percent,
according to futures on the Chicago Board of Trade. The balance of bets is on a cut to 2.5 percent. Federal Reserve
officials are staking their credibility on a bet that the fastest interest-rate cuts in two decades won't endanger their forecast
for inflation to slow in the next two years. Investors have pushed gold, oil, wheat and corn prices to records since the Fed
lowered its benchmark rate by 1.25 percentage point in January and indicated it's ready to do more when policy makers
meet next week. Inflation-linked bonds also rallied as traders anticipated the Fed will ditch the ``rapid reversal'' of rate cuts
discussed at their Jan. 29-30 meeting.
USD/JPY fair 100.00 strg 99.70 fair
99.43 strg 99.30
The global credit squeeze has forced Chairman Ben S. Bernanke to break with his preference for a goal-based approach
that keeps policy trained on price stability. The Fed chief has attacked the crisis on two fronts, accelerating rate cuts and
finding new ways of adding liquidity, including this week's $200 billion plan to lend
