http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-23402327.htm Fed funds futures suggest 75 basis point rate cut by March 18 now a certainty February 29, 2008: 12:46 PM EST NEW YORK, Feb. 29, 2008 (Thomson Financial delivered by Newstex) -- The odds of further interest rate cuts jumped Friday, with weak regional manufacturing data, increased concerns over the financial sector and a sharp drop in equity markets suggested a need for more stimulus from the Federal Reserve. March fed funds futures hiked up 0.04 points to 97.315, which implies a 100% chance that the Fed will cut its target for overnight rates by 75 basis points to 2.25% by the March 18 policy setting meeting. The odds of a full percentage-point cut by then are now 75%. Late Thursday, the odds of a 75 basis point cut were 87% and the chance of a 100 basis point cut was 66%. May fed funds futures surged 0.105 points to 97.95, implying a 95% chance that overnight rates will be at 2% after the next 2 Fed meetings (March 18 and April 30), compared with a 85% chance late Thursday. Earlier, The National Association of Purchasing Management-Chicago said it index of business activity in the Chicago area plunged to 44.5 in February much worse than the median estimate of economists surveyed by IFR Markets of 50.0. Readings below 50 signal business contraction. Separately, a disappointing quarterly report from blue chip insurance company American International Group (NYSE:AIG) weighed on the financial sector, and helped drive the Dow industrials down over 200 points in intraday trading. Tomi Kilgore tk1 Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News. Newstex ID: AFX-0013-23402327 ======================== Now correct me if I'm wrong, but is the above article in error? Is fed fund futures really pricing in a .75 to 1% cut? I was going to call BS at first until I realized that Fed fund futures should average around 3% till March 18. It would have to drop significantly to get the implied rate to average at 2.685% for the month.