The "tail risk" of a deep and protracted recession in the US has not diminished much in recent weeks in spite of the rally in the stock market and improvement in some credit markets, top Federal Reserve officials believe.
This view will probably lead the Fed to cut interest rates by another quarter point (25 basis points) to 2 per cent tomorrow. The language of the statement is likely to position the US central bank to pause at the following meeting in June, while preserving the option of a further cut at that meeting if required.
