A guessing game about the size of an expected cut in US interest rates to be announced today has given some relief to battered stock markets.
Hopes were rising that policy-making members of the Federal Open Market Committee might decide to cut rates by three-quarters of a percentage point instead of a half percentage point. Wall Street opinion was about evenly split on either outcome.
The Fed is expected to announce its decision at 7.15 p.m. this evening.
The key federal US funds rate, charged for overnight lending between banks, now stands at 5.5 per cent.
But it is still unclear whether the Fed is ready to step up its aggressive campaign with an even bigger cut today in hopes of showing its determination to keep a record 10-year-old expansion alive.
A poll of 13 of the 25 biggest Wall Street bond firms forecast a three-quarter-percentage point reduction while 12 thought a half-point move was more likely.
After a dismal showing last week, stock prices surged yesterday, with the Dow Jones industrial average up 135.70 points to close at 9,959.1 and the Nasdaq composite index ahead 60.28 points to end at 1,951.19.
If the Fed decided to lower rates by three-quarters of a percentage point it would be the most aggressive cut in rates since December 1991 when the central bank reduced rates by a full percentage point.
Not everyone thinks the Fed must go beyond a third straight half percentage point cut, given some recent measures that imply the expansion may still have room to run.
National unemployment remained at just 4.2 per cent in February while housing sales and construction have remained at healthy levels.