Here’s a wrap of what the news outlets think will happen this afternoon when the Fed meets. Will they cut the fed funds rate? Most people think so. When you’re done reading, visit Clusterstock and vote on what size the rate cut will be.
WSJ:The Federal Reserve is widely expected to cut its benchmark interest rate again Wednesday, possibly to 1%, amid a darkening economic outlook.
The case for more rate cuts strengthened Tuesday, with new reports showing the U.S. economy deteriorating sharply. Consumer confidence tumbled to a record low in October as credit markets collapsed. The percentage of Americans saying jobs were hard to get — at 37.2% — is at a 15-year high and seemssure to go higher.
Marketwatch: The Fed, which has already taken a series of dramatic steps to ease the effects of the credit crunch that is sweeping world markets, is expected to lower its key overnight lending rate to 1% from 1.5%, bringing the federal funds rate to its lowest since 2004.
But bringing rates lower right now might not help very much, analysts said, because the effective federal funds rate has already fallen to 1% because of a new Fed policy to pay banks interest on the excess reserves they deposit at the Fed.
“The fed funds rate is almost irrelevant,” Wallace said. “The easing has already taken place.”
NYTimes: Most investors were keeping an eye on Washington, where Federal Reserve policy makers are meeting for a second day. Investors expect the central bank to cut its main rate target to at least one per cent from the current 1.5 per cent, but some forecasters have predicted the Fed could cut to as low as 0.75 per cent Wednesday.
The major indexes all opened slightly lower as investors took some profits after the large rallies, but had ventured into positive territory by 10 a.m., before slipping back. Traders did not race for the exits with Tuesday’s gain, a potential indication of a market with some confidence that the upswing would hold.
FT: The market is pricing in a 50 basis point interest rate cut from the Federal Reserve, which is due to announce its decision at 2.15pm in Washington. Some traders speculated that a wider cut could be possible.
Howard Wheeldon, strategist at BGC Partners, said: “Slashing interest rates all well and good – will it be enough to do the trick? Probably not.”
Reuters: China and Norway kicked off the latest round of global interest rate cuts, with the United States expected to follow later on Wednesday as policy-makers tried to soften the world’s economic downturn.
The Europe Central Bank and Britain are expected to add to the worldwide monetary easing next week as authorities remain fearful that the worst financial crisis in 80 years will cause a long global recession.
China increasingly appears to be the world’s last centre of growth and has said it would not fall victim to the crisis. It cut its interest rate to 6.66 per cent from 6.93.
The Federal Reserve is widely expected to cut U.S. rates on Wednesday by at least half a point to 1 per cent, the lowest level since June 2004.
Norway’s central bank cut rates by 50 basis points to 4.75 per cent, ending more than three years of tightening.
The rate cuts lifted stock markets for much of the day but analysts said any recovery would be short-lived given that a sharp economic downturn was already in progress.
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