Showing posts from January 22, 2008

And bad economic news

Business Times - 22 Jan 2008

Business Times - 24 Jan 2008

Cutting rates like it's an election year


THE decision by the Federal Open Market Committee (FOMC) on Tuesday to lower its target for the federal funds rate 75 basis points to 3.5 per cent is probably only the first in a series of such cuts by the policy arm of the US central bank. This is the largest cut since 1982 when it started using cuts to the federal funds rate as a primary policy tool.

The Fed chief Ben Bernanke and his colleagues on the FOMC have already cut the funds rate by 1.75 percentage points since last year and most observers expect the central bank to embrace another cut of 25 basis points at the scheduled FOMC meeting next week and to continue cutting rates to 2.5 or even two percentage points by the end of this year.

If the conditions in the markets continue to deteriorate there is a possibility that the FOMC will cut rates by half a percentage point next week.

The sur…