Economists expect Fed to cut rates Wednesday
NEW YORK (10/28/08)--As the Federal Reserve Board's policymaking body heads into a two-day meeting today, most economists surveyed say they expect another interest rate cut to be announced Wednesday.
Of the 45 economists surveyed by USA TODAY, 82% expect The Federal Open Market Committee (FOMC) to reduce the fed target for short-term interest rates from its current 1.5%. Of that group, 44% anticipate a half-point reduction and 38% expect a quarter-point cut (USA TODAY (Oct. 27).
The expectations come at a time when the nation marks the first decline in consumer spending in 17 years. A reduction to 1% would be at a level not seen since mid-2004.
The survey shows a significant deterioration in economists' assessment of the economy since the last survey conducted in July, said the newspaper. In July, 51% of economists surveyed said the nation was in a recession. In the latest survey, all but one agree the U.S. is in a recession.
The Fed's last rate cuts occurred on Oct. 8, when it cut rates in a surprise move coordinated with central banks around the world in the midst of the stock market's volatility.
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