Fed to cut rates by 100 basis points in March, Rabobank says

Rabobank changed its call for interest rate cuts by the US central bank on the back of what it termed the "current market panic and slow progress in effective policy measures by the [US] federal government."

That, the Dutch broker said, would force the Federal Open Market Committee to slash ratesm bringing the lower bound of the target range for the Fed funds rate back to zero as soon as March.

Another emergency rate cut before the FOMC's 17-18 March meeting was possible, they added.

Even if the Fed opted to cut by less than 100bp on 18 March, the analysts anticipated that they would be forced to cut to zero later in the same month.

"After reaching the zero bound, the FOMC is likely to provide forward guidance promising to keep the target range at the zero bound for an extended period of time."

"The Fed is also likely to deploy its liquidity tools from the financial crisis very soon and extend its dollar liquidity swap lines.

"In the coming months we may also see the start of another round of quantitative easing."