Fed Funds Futures Point To Rate Changes - Observers Find Predictability Accurate Within Week Of FOMC.

Byline: Ken Hoover, Investor's Daily

A critical meeting of the Federal Reserve's Open Market Committee is coming up May 16, and the airwaves and newspapers are filled with pundits' pronouncements about what the Fed will do. Will it raise interest rates a quarter point? Is a half-point increase in the offing? You can forget the windbags and see for yourself what the Fed is likely to do by watching the federal funds futures market. "It's very useful for the individual investor because it's the most accurate gauge of Federal Reserve policy," said James Bianco, president of Barrington, Ill.-based Bianco Research. The federal funds rate, now 6%, is the interest rate banks charge each other on overnight loans. The Fed sets the target for the rate; the actual rate …