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 September 18, 2007

Federal Reserve Expected to Cut Rates Tuesday
Many US economists believe that the Federal Reserve Board will cut the federal funds rate for the first time in more than four years at its meeting on Tuesday, September 18, 2007. Some economists are anticipating a .025% point cut, while others expect to see as much as a .050% point cut.
Experts state that a decline in the short-term interest rate will be an indicator that rising inflation is not as large a concern as an economic slowdown, and will more than likely be instituted in response to a household survey which revealed that 300,000 jobs were lost in the month of August and that the average of 17,000 jobs have been lost each month since the start of this year.

On the other side, Richard DeKaser, chief economist with National City Corporation, is concerned the central bank could further weaken the dollar worldwide and in turn effect inflation be cutting short-term interest rates. Some experts feel that such an action would not have that much of an effect on mortgage costs, as those types of loans are tied to long-term interest rates.

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