February 13, 2008 / 2:19 PM / 11 years ago

US RATE FUTURES-Inch higher, shaking off retail sales

(Adds comments, updates prices)

SAN FRANCISCO, Feb 13 (Reuters) - U.S. short-term interest rate futures inched higher on Wednesday after a sell-off on news of higher than expected January retail sales failed to gain traction.

The Commerce Department said January retail sales rose by 0.3 percent against forecasts for a 0.2-percent decline, but details of the report were less optimistic.

Prospects for a 75 basis point at the Federal Reserve’s policy meeting in March FFJ8 fell to 16 percent but soon bounced back to 22 percent against 20 percent late on Tuesday. A 50 basis point rate cut is fully priced.

Analysts said the details of the report were less encouraging to the U.S. economy than the headline gain.

“I doubt this is going to change the broader view that consumer spending is decelerating and that the consumer remains very vulnerable to negative shocks,” said Alan Ruskin, chief international strategist at RBS Greenwich Capital in Greenwich, Connecticut.

Excluding sales of gasoline and autos, sales growth was flat, following a 0.3-percent decline in December.

“The consumer is still facing a lot of head-winds with jobs growth at a standstill and large negative wealth effects from housing and financial markets,” said strategists at 4CAST Ltd.

Reporting by Ros Krasny, Editing by Chizu Nomiyama,

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