Greg Ip

Articles by The Economist’s U.S. Economics Editor

Archive for April 2008

Fed Weighs Pause After Next Rate Cut

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Inflation Worries Loom as Economy Continues to Stall

By GREG IP

The original article is linked here.

WASHINGTON — The Federal Reserve is likely to cut its short-term interest rate by a quarter of a percentage point next week — but then may be ready for a breather.

The Fed, meeting Tuesday and Wednesday, is likely to make what would be its seventh cut in eight months. The reason: Some officials see a case for more insurance against a deeper recession.

But others are concerned a cut could contribute to inflationary pressure with little benefit for growth. That means the option of standing pat will likely also be on the table. If it does cut rates, the Fed could signal in the statement accompanying the decision an inclination to pause and assess the impact of its cuts, which have lowered the federal-funds rate to 2.25% from 5.25% since last year. Read the rest of this entry »

Written by gregip

April 24, 2008 at 11:27 pm

Fed Weighs Its Options in Easing Crunch

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  • APRIL 9, 2008
  • The original article is linked here.

    WASHINGTON — The Federal Reserve is considering contingency plans for expanding its lending power in the event its recent steps to unfreeze credit markets fail.

    Among the options: Having the Treasury borrow more money than it needs to fund the government and leave the proceeds on deposit at the Fed; issuing debt under the Fed’s name rather than the Treasury’s; and asking Congress for immediate authority for the Fed to pay interest on commercial-bank reserves instead of waiting until a previously enacted law permits it in 2011. Read the rest of this entry »

    Written by gregip

    April 9, 2008 at 11:32 pm

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