[OPE] Recession could be best medicine
From: Alejandro Valle Baeza (email@example.com)
Date: Sat Mar 15 2008 - 16:34:11 EDT
Recession could be best medicine
Some economists, including one Fed member, say more rate cuts could be
bad for the
economy. But most expect Bernanke & Co. to slash rates again
By Chris Isidore, CNNMoney.com senior writer
Last Updated: March 15, 2008: 12:59 PM EDT
NEW YORK (CNNMoney.com) -- Two widely accepted beliefs about the
upcoming Federal Reserve
meeting Tuesday are that the central bank is worried about the country
falling into a recession and
that it will again slash interest rates sharply.
But should the Fed stop worrying and love a recession?
Several economists, including one member of the Fed's policy-making
committee, have argued that
more rate cuts are the wrong solution to spur economic growth. Some
even believe a recession
might be the best answer for the economy in the long term. That's still
a minority view though.
Federal funds futures on the Chicago Board of Trade show investors
betting that there is a 100%
chance of at least a three-quarter percentage point cut at the March 18
meeting, and a 52% chance
of a full percentage point cut.
Even most critics of the Fed's rate cuts concede some additional cuts
are certain Tuesday,
especially since a report Friday morning showed that consumer prices
held steady last month.
If the Fed cuts as much as some expect, that would put its key federal
funds rate at 2%, down from
5.25% when the Fed first began lowering rates six months ago.
Yet, it's not clear that the Fed cuts can do much to fix what ails the
U.S. economy as it undergoes a
Full article at: http://money.cnn.com/2008/03/14/news/economy/fed_outlook/index.htm?postversion=2008031512
Alejandro Valle Baeza
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