Fed likely to make conventional rate cut

IT'S all about the Fed.

Last week, US stocks went nowhere fast, amid conflicting signals from earnings reports, Iran and - above all - the Federal Reserve.

While stocks gave up some gains, major indexes remain close to all-time highs. This week is likely to see more minor jitters unless events in the Middle East, earnings reports, or the European Central Bank (ECB) can break the market's monomania.

Early in the week, some Fed officials, including Dallas Fed President Robert Kaplan had emphasised the need for restraint in rate cuts.

Mr Kaplan said anything too aggressive could lead to imbalances in markets. Futures markets dutifully lessened the odds of a drastic half percentage point cut.

On Thursday, Fed Bank of New York President John Williams put the aggressive action back on the table, or at least that's how futures and stock markets interpreted his comment that "swift" action was necessary. Stocks gave back those gains on Friday after a highly unusual about-face in which Mr Williams' bank issued a statement explicitly saying he had not intended to convey any support for a bumper ra…