10-25-2008, 11:54 PM
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#2
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Senior Member
Join Date: Aug 2007
Location: Okolona, Ky.
Posts: 6,156
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Another rate cut below 1%?...
Fed heads toward uncharted territory
October 24, 2008: Ben Bernanke & Co. are likely to cut interest rates again on Oct. 29. And some experts think rates could soon fall below 1% for the first time.
Quote:
The Federal Reserve is widely expected to cut interest rates again next week. But could the Fed soon go where it has never gone before and bring them below 1%? The Fed lowered its federal funds rate, the benchmark overnight lending rate at which banks lend to one another, by a half-percentage point to 1.5% in an emergency announcement Oct. 8. Many investors believe the central bank will cut rates by at least another half-percentage point following the end of a two-day meeting on Oct. 29.
In fact, the fed funds futures on the Chicago Board of Trade are now pricing in a 26% chance that the Fed will cut rates by three-quarters of a percentage point to 0.75% by that meeting. Fed Chairman Ben Bernanke has said in recent weeks that economic weakness is likely to continue into next year, despite rate cuts and other recent moves taken by the Fed and Treasury Department to try and fix the credit crisis.
On Monday, Bernanke pushed Congress to consider a new stimulus plan to spur the economy. "Everyone at the Fed has pretty much told you they're going to cut," said Rich Yamarone, director of economic research at Argus Research. "They're in a kitchen sink mode right now. Rate cuts, fiscal stimulus, bailouts - they're throwing everything they can at this right now." Still, would the Fed really consider lowering interest rates below 1%? The last time rates were at 1% was between June 2003 and June 2004.
More Fed: New rate cut likely, with record low within sight - Oct. 24, 2008
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Bernanke warms to second stimulus plan
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