Fed Rate Cut Predicted

The monetary policy meeting of the Federal Reserve is just two days away, and many predict that the institution is likely to cut the short-term interest rate once again, from 2.25%to 2%.

This would be the seventh time that the rate has been lowered since August, and would signal that a recession is still a strong possibility this year.

Although the stock market is doing relatively well at the moment, soaring prices for oil and food have fostered a growing fear of imminent recession.

In addition, as Steven Weisman of the New York Times reminds us, "A tricky aspect of the Fed’s decision is that the impact of whatever it does may not be felt for more than six months. Many economists say it takes at least that long for interest rate cuts to have an economic effect."

In the end, one major issue that the Fed will battle over is the need to take care of inflation versus the need to ward of a recession.

Click here to read Weisman's article in its entirety.