More Fed Rate Cuts Expected Today
As part of an ongoing effort to stave off a recession and shore up the U.S. economy, beleaguered by the housing market slump and credit crunch, the Federal Reserve is expected to lower U.S. interest rates later today. (The Fed is expected to announce its decision at approximately 2:15 p.m. EST.)
Financial markets are predicting a three-in-four likelihood that the bank slashes its benchmark overnight rates by a half-percentage point, with at least a quarter-point trim a certainty.
An additional rate reduction would come on the heels of the three-quarter-point reduction the Fed made on January 22, which would make this one of the most aggressive and fastest rate-cutting periods in over two decades. "Weaker consumer confidence and spending data, along with rising housing inventories and plunging home prices, will likely keep Fed officials concerned about 'appreciable' downside risks to growth," according to economists at UBS.
In explaining its position and actions, the Fed said the cuts have been the result of a dim view for economic growth and an increase in downside risks, as well as the reality of businesses and households facing an ever-tightening credit market.
Published on January 30, 2008
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