Tuesday, December 11, 2007

US central bank set to cut rates

The US central bank is expected to cut interest rates to 4.25% from 4.5% when Federal Reserve officials meet later.

Analysts predict the Fed will cut rates for the third time in 2007 to boost economic growth and ease the impact of the housing crisis and credit crunch.
But a half a percentage point cut is less likely, analysts say, given that more jobs were created in November than had been expected.
The meeting of the Fed will be its final one of the year.
The bank is expected to make its announcement on interest rates at 1915 GMT.
Third time?
The Federal Reserve has cut rates twice already this year. On 18 September, the central bank cut interest rates from 5.25% to 4.75%.
The first cut in four years, it was aimed at preventing a downturn in the housing market and limiting the impact of the credit crunch.
It lowered rates again on 1 November, reducing them to 4.5%. This loosening of monetary policy has been replicated around the world. In the past week, the Bank of England cut rates from 5.75% to 5.5%, though the European Central Bank decided to keep rates on hold at 4%.
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