Some other countries do this (China for example). It seems that 10 basis point increments
would be reasonable.

Moving in 25 basis point increments shows clearly how strongly the Fed feels at a given
moment. It also makes it easier for the Fed as 50bp compared to 25bp is a huge difference
and makes a clearer statement. Smaller increments may lead to an attempt to move an
"exact needed" amount when this is not an exact science.

The bottom though line is that this is what people are used to and it will likely stay.
It is also clear to see in Fed Funds futures trading where the implied probability is for
future moves with a large separation between the probable choices.

its a bit easier to do the math but yes i agree that there are times when they should use
them to cut more. last meeting i said they should cut 60 basis points and if inflation
comes on too strong they can go up 10bps to ease the market into the idea of higher rates.


but this will not be done in my estimation.

How come the fed only seems to cut in denominations of .25? It seems to me that
sometimes, after the math is done, that maybe the cut should be .37, or .21, why is it
always a .25, .50?

thanks