Fed Rate Cut Expected Today
- Mar 18, 2008
Washington, D.C.–The Federal Reserve is expected to issue a large rate cut at today’s meeting–possibly as large as a full percentage point drop to 2 percent, MarketWatch reports. The move would indicate that the Fed views the threat of a financial market collapse and a potential impending U.S. recession as serious, prompting a fast and firm action.A lower fed funds rate helps banks immediately rebuild their capital by reducing their borrowing cost. However, the other effect lower rates can have–increasing consumer and business borrowing–could take more time.Economists have said the worsening economic conditions since the last Fed meeting have increased the feeling that the economic downturn could continue longer than expected, escalating the need for a rate cut.