Fed set to hold rates steady, may signal cuts
Written on September 16, 2008
Federal Reserve policy-makers are expected to stop short of lowering U.S. interest rates at a meeting on Tuesday but could signal readiness to cut them quickly if needed to protect the economy from one of the most serious financial crises in decades.
The Fed has held the interbank overnight interest rates steady at a low 2 percent since April to help the economy recover from a deep housing market decline and sharp lending pullback.
“The Fed appears more willing to address the current credit and economic difficulties through an expanded discount window and credit facilities rather than a cut in interest rates,” said John Silvia, chief economist for Wachovia Economics Group in Charlotte, North Carolina.
The U.S. central bank will announce its decision on interest rates at around 2:15 p.m. EDT.
Policy-makers said at their most recent meeting in early August that the Fed would act as needed if economic and financial developments posed a threat to sustainable economic growth and stable prices.
On Monday, U.S payday loans in 1 hour. stocks plummeted with the Dow Jones industrial average posting a more than 500-point drop, its biggest one-day slide since September 2001.
The tumble in stocks followed a whirlwind weekend that brought the bankruptcy of 158-year-old Lehman Brothers Holdings Inc, the sale of investment bank Merrill Lynch to Bank of America, and a scramble for more cash by insurer American International Group Inc.
The Treasury Department had only a week earlier announced the government would take over operations of mortgage finance enterprises Fannie Mae and Freddie Mac, and was ready to infuse both institutions with up to $200 billion in capital if necessary to keep mortgage markets operating smoothly.
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