Fed Ponders Pause in Rate Cuts—After 1 More

Experts expect a last cut to 2% before the central bank stops and waits
By Jim O'Neill,  Newser User
Posted Apr 24, 2008 10:05 AM CDT
Federal Reserve Chairman Ben Bernanke delivers the Fed's Monetary Policy Report, on Capitol hill in Washington.   (AP Photo/Dennis Cook, File)
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(Newser) – The Federal Reserve may be ready to cool its torrid rate-cutting after a likely .25% percentage point cut at its meeting next week, the Wall Street Journal reports. Futures markets are betting Chairman Ben Bernanke is unlikely to rest just yet, with little change in the month-to-month economic picture, but will pause after that to assess the cuts' effect and avoid stoking inflation.

Too deep a cut could provide marginal economic relief while leaving the central bank little wiggle room if the recession worsens. "They can't give the all-clear signal, but they can say there's a presumption in favor of a pause," says a former Fed governor. A cut next week would be the seventh in eight months, from 5.25% to 2%.