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Tuesday, March 11, 2003

Possible Fed Cut on the Horizon?

Rumourology is at work again. Does last Friday's disappointing US employment data, and the rapidly deteriorating global economic and geopolitical environment mean the Fed might just contemplate another cut this week? Your guess is as good as mine, but Roach has been emphasising that the Fed has assimilated the cut early and cut often lesson from the Japanese experience. So maybe they just might. After all, things are getting to look pretty dark out there.

The Federal Reserve (news - web sites) may soon be forced to cut interest rates again, driving them to the lowest level since Dwight Eisenhower was president, amid fears that the shaky economy is about to fall back into recession. Concerns about the anemic recovery from the 2001 downturn were heightened with last week's report that unemployment had risen to 5.8 percent in February, with a big loss of 308,000 jobs. "Prior to the unemployment report, we thought the Fed would stay on hold for some months to come and the next move would be a rate hike, not a rate cut," Louis Crandall, chief economist at Wrightson ICAP, a bond market research firm, said Monday. Now, Crandall said, he is forecasting a quarter-point rate cut at the March 18 Fed meeting.
Source: Yahoo News

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