Disappearing jobs, burrowing consumers and skittish companies are reasons for the Federal Reserve to lower interest rates and brace the tottering economy, according to an Associated Press report.
Fed Chairman Ben Bernanke and his colleagues open a two-day meeting Tuesday (Oct. 28) afternoon – their last before the November elections — to make a fresh assessment of economic and financial conditions and decide their next move on rates. Their decision will be announced Wednesday.
It is all but certain the Fed will cut rates – for the second time in this month alone. The big question: Just how low will the Fed go?
Investors on Wall Street and many economists are betting the Fed will slash its key rate by half percentage point to 1%. A few, however, however, think the Fed will opt for a smaller, quarter-point reduction to 1.25%.
Anticipation of a rate cut combined with a buying spree by investors scooping up stocks that had been pounded in recent sessions to push the Dow up nearly 900 points and eclipsing the 9,000 benchmark.
The surge represented the second-largest point gain, coming after the 936 points the Dow jumped on Oct. 13.