Vital Signs: Economists Expect Another Rate Cut
All eyes will be on the Federal Reserve this week, as its policy committee sits down to discuss the Fed’s increasingly unconventional strategy for shoring up the financial markets and arresting the economy's slide. Economists currently expect the policymakers to cut the target interest rate on the overnight funds banks trade with each other from 1% to 0.5%. The trouble is, the markets may have a difficult time finding any meaning in such a cut. Since Dec. 4, overnight funds have been trading at a market rate of 0.06% -- effectively zero and nowhere near the current 1% target.
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