Wednesday, June 14, 2006

More than 100% chance?

After the consumer price index (CPI) data came out higher than expected today, there was a jump in the probability of the Fed increasing interest rates later this month. But what does "more than 100% probability" mean? Sounds incredibly dumb ... here is the actual quote from the Reuters story:

"Interest rate futures were pricing in a more than 100 percent chance the Federal Reserve would lift rates later this month. On Tuesday, the chances were pegged at 86 percent."

Can someone explain what the heck does "more than 100 percent chance" mean?

[UPDATE - the reuters link has been replaced with a new story - too bad i dont have a permalink to the original story - but trust me the words were there - quoting verbatim from the original Reuters page!!]

1 comment:

SBR said...

I think, they changed the story. I can't find the sentence you quote in the link.