Ammo low, Fed eyes last bullet to lift
economy
Federal Reserve's expected
interest-rate cut this week may add modest stimulus but is not without risks.
By Ron Scherer | Staff writer of The Christian Science Monitor, June 23,
2003 edition NEW YORK - For the past 2-1/2 years, the
Federal Reserve has lowered interest rates to stimulate the economy. The result has been a virtual gully washer of money in the economy. But now, as the Fed
contemplates yet a 13h cut, it has become much more difficult and complicated
to pump up the economy by lowering short-term interest rates. So, when the Fed meets Tuesday and Wednesday to review the
economy and make a decision on interest-rate policy, it will have to consider why this rainstorm of cash hasn't done the
job. If
business won't build new factories at these low interest rates, will even lower
rates make any difference?
And, as interest rates get closer to zero, Fed chairman Alan Greenspan will
have to ponder if he needs to keep some ammo in his pouch in case he needs it
later this summer. "The Fed's decisions are becoming increasingly
difficult," says Jon Blumenfeld, US Interest Rate Strategist at
Commerzbank Securities in New York. Despite the difficulties, Fed-watchers expect Alan Greenspan
and his fellow bankers will reduce rates yet again - probably by a quarter of a
percent. But, a half a point is not out of the question. http://www.csmonitor.com/2003/0623/p02s01-usec.html |
CSM Ammo low Fed eyes last bullet to lift economy 062303.doc
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