Record Low Rates Leave Investors Cold

Cut is likely tomorrow, but Wall Street wants more varied approach
By Jason Farago,  Newser Staff
Posted Dec 15, 2008 9:14 AM CST
Record Low Rates Leave Investors Cold
Federal Reserve Chairman Ben Bernanke appears on a television screen on the floor of the New York Stock Exchange, Dec. 1, 2008.   (AP Photo)

(Newser) – Tomorrow the Federal Reserve will probably cut its target interest rate to 0.5%, the lowest in decades. But, the Wall Street Journal reports, investors are unlikely to be cheered by a further slash, instead waiting to hear what further measures Fed chief Ben Bernanke is preparing now that interest rate cuts have essentially stopped working.

This month the Fed began to buy up certain debt in an attempt to drive down mortgage rates, and is beginning a process of “quantitative easing”—that is, printing more money and funding further lending with the cash. Whatever Bernanke does, investors are desperate for specifics; as one rates strategist said, “The more they broaden out, the more they’ll have unintended consequences.” (Read more Ben Bernanke stories.)

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