Federal Reserve Expected to Cut Rates .5 Percent Today

At 2:15 PM today the Federal Reserve is expected to drop rates by a half of a point as part of an ongoing effort to combat the effects of the housing slump and credit crunch on the economy.

The Federal Reserve’s policy setting Federal Open Market Committee resumed at 9 am this morning. They are expected to review the data that came in today from the Gross Domestic Product which reported a lower than expected fourth quarter growth of .6 percent.

“Weaker consumer confidence and spending data, along with rising housing inventories and plunging home prices, will likely keep Fed officials concerned about ‘appreciable’ downside risks to growth,” wrote economists at UBS, who are expecting a half-percentage point cut.

In explaining its aggressive move last week when the Federal Reserve dropped rates .75%, they said the outlook for economic growth had weakened and downside risks had risen. Policy makers also said businesses and households were beginning to feel the pinch of tighter credit.

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