How much the FED will cut its rate this week?
Posted on April 29, 2008
Filed Under Forex News |
With the current US battling economy, FED is highly likely to bump down its key interest rate again.
The market is confident that Federal Reserve will only lower its interest rates by 25 basis point on Wednesday. However, many analysts also believe that this rate cuts may turn out be the last one for the near term as the FED is fighting double digit inflation with the continual rise of energy and food prices.
If Federal Reserve lowest its interest rate to 2%, this rate may still not be lowest in recent history. During the last recession in 2001, FED lowered its key rate to just 1%, lowest rate in 4 decades. It was held for a year before the FED before it was raised again. Recently, many analysts had criticism that very rate by former FED chairman, Alan Greenspan assisted the very housing boom that has now gone bust. In turn, created havoc for the financial industry with bad mortgage loan and foreclosures. This multibillion losses by the finance companies and all its fallout has sent the global economy reeling.
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Bernanke seems as inscruitable as Greenspan, yet even more of an enigma. I doubt Old Al would have cut rates nearly as fast as Bernanke did in January. Sure makes you wonder just how severe this recession is going to be.