Fed is Prepared to Cut Interest Rates

February 27, 2008 1:41:36 PM PST
The nation's top banker says he is prepared to cut interest rates yet again in the face of hard times.From foreclosures to food to fuel, the numbers are all up. Inflation is rising at its fastest rate in nearly three decades and the focus is on one man to fix it.

The Chairman of the Federal Reserve went before Congress in the midst of new economic obstacles. A new record high for oil, now over $100 dollars, and record low for the value of the dollar. "After several decades, the economic term stagflation has reemerged," said Federal Reserve Chairman Ben Bernanke.

The Chief Economist at Deutsche Bank, Joseph Lavorgna said, "The current environment is similar to the late 70s and early 80s, in that inflation is high and rising and the economy is weak and slowing."

More bad news this morning, for the third straight month new home sales have fallen, creating the slowest pace in nearly 13 years. And if you're traveling to Europe, it will cost $1.50 to get one euro. In Britain, it will cost you $2 to get one pound.

But there is a silver lining according to Lavorgna. "The robust global economy is a factor helping the U.S. and it may even keep the U.S. out of recession while additional rate cuts from the Fed could lead to more inflation."

Anne Mathias of the Stanford Research Group claimed, "It is much easier to tackle high inflation than it is for the fed to try to resuscitate an economy on its death bed."

Congress already agreed on a stimulus package and tax rebates that should make it to Americans' mailboxes this summer.

Analysts are anticipating another interest-rate cut. If so, that could come at the next fed meeting march 18th.


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