As expected the Fed just cut interest rates to try to stem problems in the US housing market:
Faced with a widening mortgage crisis, the Federal Reserve Tuesday cut a key interest rate for the third time in three months.
“Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Todayâ€™s action, combined with the policy actions taken earlier, should help promote moderate growth over time,” the central bank said in a statement released with the announcement.
Story on MSNBC.
Many analysts believe the current quarter and the early part of next year will represent the period of maximum danger for a possible recession.
â€œI think a full-blown recession can be avoided but just barely,â€ said David Jones, chief economist at DMJ Advisors. He predicted that the Fed will follow up with three more rate cuts at its first three meetings of 2008.