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Fed expected to lower rates, may signal pause Mark Felsenthal / Reuters | April 30, 2008 The Federal Reserve is expected to cut interest rates by a modest quarter percentage point on Wednesday and may suggest the rate-cutting cycle it kicked off last fall has reached an end. The Fed will announce its decision on rates and offer an assessment of threats facing the economy at around 2:15 p.m. "The statement ... will make it clear that the net risk to growth is still to the downside, but that the risks have been reduced by the Fed's actions," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York. The central bank's decision may be shaped in part by a government report on U.S. gross domestic product due just hours earlier. Analysts expect the report to show the economy expanded at a miserly 0.2 percent annual pace in the first quarter. (Article continues below)
Fed policy-makers, who opened a two-day meeting on Tuesday, confront a bleak landscape with an economy moving sideways at best, elevated prices for food and fuel, a deep housing downturn and lingering malaise in financial markets. The Fed has cut benchmark overnight rates to 2.25 percent from 5.25 percent since mid-September. Of 20 primary dealers participating in a Reuters poll last week, all 20 said the Fed would cut its fed funds rate target for overnight bank loans by a quarter percentage point on Wednesday. CLICK ON THE BANNER TO BUY TERRORSTORM IN |
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