see the headline. read your mind. what is in your mind
这次狼真的来了 ------ Sep 18
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Fed Interest Rate Cut Seen This Week
Sunday September 16, 7:27 pm ET
By Jeannine Aversa, AP Economics Writer
WASHINGTON (AP) -- For the first time in more than four years, the Federal
Reserve appears ready to lower interest rates to prevent a housing meltdown
and a painful credit crunch from driving the economy into a recession.
A rate cut would affect millions of borrowers, with the intention of getting
them to spend and invest more, which would revitalize the economy.
In one of their most important and anxiously awaited decisions, Fed Chairman
Ben Bernanke and his central bank colleagues meet Tuesday to determine
their next move on interest rates. Those policymakers are widely expected to
cut an important rate, now at 5.25 percent, by at least one-quarter of
percentage point. Some analysts predict a bolder step, a half-point
reduction.If the Fed drops the rate, then the prime lending rate that
commercial banks charge many individuals and businesses would fall by a
corresponding amount.
"It's no longer a debate over whether they will ease but by how much," said
Mark Zandi, chief economist at Moody's Economy.com. "The economy is soft and
getting softer," and the Fed has come under economic and political pressure
to act.
Should the Fed go with a quarter-point cut, analysts expect policymakers
will lower the rate again in October and in December, their final meeting of
the year.
....."It's like taking an antibiotic. After you take the first dose, you don
't feel immediately better. But after a series of dosages accumulate, there
will be a more positive effect," explained Stuart Hoffman, chief economist
at PNC Financial Services Group.
Over the short term, a rate cut would provide an important psychological
boost...
Fears that the deepening housing slump and a spreading credit crisis could
short-circuit the six-year-old economic expansion have shaken Wall Street
over the past few months. Stocks have swung wildly, with sharp drops
reflecting investors' bouts of panic....
So far, though, consumers have not cracked. Retail sales rose a modest 0.3
percent in August, after a 0.5 percent gain in July, the government reported
Friday. Problems have been most pronounced in housing.
Analysts expect the economy will slow to a rate of about 2 percent in the
current quarter, from July through September. That would be just half the
rate of the three previous months. Growth in the final three months of this
year could turn out even weaker.
Former Federal Reserve Chairman Alan Greenspan, in an interview broadcast
Sunday on CBS' "60 Minutes," said he believes the economy will be able to
weather the financial storm.
The last time the funds rate, which is the interest that banks charge each
other, was lowered was in late June 2003. The rate is the Fed's main tool
for influencing the economy.
