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Fed expected to cut US rates to 0.5%
Kathryn Hopkins and Larry Elliott
London
Guardian
Tuesday, Dec 16, 2008
The Federal Reserve is tonight expected to step up its battle
to revive the recession-hit US economy when it cuts interest rates
to a record low of 0.5% and announces measures first tried in
the Great Depression to bring down borrowing costs for companies
and home owners.
The American central bank began a two-day meeting yesterday as
it announced data that showed another sharp plunge in industrial
output last month. Wall Street believes the recent calamitous
economic news guarantees the 10th cut in the Fed funds rate since
the credit crunch began in August 2007.
Analysts also expect measures to bring down the longer term cost
of borrowing. This process, known as quantitative easing, involves
the central bank buying up long-dated treasury bonds in order
to reduce supply and eventually bring down long term interest
rates.
(ARTICLE CONTINUES BELOW)
Graham Turner, of consultants GFC Economics, said: "It is
no exaggeration to say that this week's Fed meeting is the most
important since April 1932."
The central bank, chaired by Ben Bernanke, has already slashed
rates by 4.25 percentage points over the last 14 months to leave
them at 1%.
The Fed said yesterday that US industrial production dropped
0.6% in November, with manufacturing down 1.4%. This was slightly
less than expected, but still prompted several economists to predict
that industrial production would drop by about 10% in 2008.
Full
article here
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INFOWARS:
BECAUSE THERE'S A WAR ON FOR YOUR MIND
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