Tags: interest | rates

Bethune: Fed Could Cut Below 1 Percent

By    |   Friday, 24 Oct 2008 02:15 PM

Economists are hedging their bets that the Federal Reserve is going to announce a quarter or half point rate cut to 1 percent when it meets Oct. 28-29. Brian Bethune even thinks the Fed won't stop there and will cut rates even lower.

"The problem the Fed has now is the deflationary genie is out of the bottle," the chief U.S. economist at Global Insight, told CNBC.

The last time rates were at 1 percent was between June 2003 and June 2004.

Rich Yamarone, director of economic research at Argus Research, agrees that a rate cut is probable.

"Everyone at the Fed has pretty much told you they're going to cut. They're in a kitchen sink mode right now. Rate cuts, fiscal stimulus, bailouts, they're throwing everything they can at this right now," he told CNN.

Rate cuts have been a key tool used by the Fed in the past to boost a weak economy. Earlier this month, in a move coordinated with other central banks, the Fed made an emergency rate cut from 2 percent to 1.5 percent.

Up until then, the Fed had cut rates seven times between September 2007 and April before holding them at 2 percent until this month.

The Fed also reduced its discount lending rate by half a percentage point to 1.75 percent.

Some economists, though, say the Fed won't cut rates again, unless it absolutely has to.

"I think 1 percent is one of those key levels that Fed officials would want to avoid at any cost," economist David Jones of DMJ Advisors told CNBC.

© 2017 Newsmax. All rights reserved.

 
1Like our page
2Share
StreetTalk
Economists are hedging their bets that the Federal Reserve is going to announce a quarter or half point rate cut to 1 percent when it meets Oct. 28-29. Brian Bethune even thinks the Fed won't stop there and will cut rates even lower."The problem the Fed has now is the...
interest,rates
262
2008-15-24
Friday, 24 Oct 2008 02:15 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved