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| Version 1 | Version 2 |
|---|---|
| Cut in US interest rates expected | Cut in US interest rates expected |
| (about 4 hours later) | |
| The Federal Reserve is widely expected to cut the key US interest rate from the current level of 1.5% at the end of its two day meeting on Wednesday. | The Federal Reserve is widely expected to cut the key US interest rate from the current level of 1.5% at the end of its two day meeting on Wednesday. |
| It has only been three weeks since it cut rates from 2% in a co-ordinated action with five other central banks. | It has only been three weeks since it cut rates from 2% in a co-ordinated action with five other central banks. |
| A cut of half a percentage point this time would take the federal funds rate down to the 1% level last seen between June 2003 and June 2004. | A cut of half a percentage point this time would take the federal funds rate down to the 1% level last seen between June 2003 and June 2004. |
| The decision is due to be announced at 1815 GMT. | The decision is due to be announced at 1815 GMT. |
| "The Fed is staring this recession in the face and while the members know that a cut in rates is not going to do much, it is now all about creating confidence," said Joel Naroff at Naroff Economic Advisors. | "The Fed is staring this recession in the face and while the members know that a cut in rates is not going to do much, it is now all about creating confidence," said Joel Naroff at Naroff Economic Advisors. |
| Deflation fears | Deflation fears |
| The Dow Jones surged almost 11% on Tuesday, partly boosted by hopes of a cut, although it is still 16% lower than it was at the beginning of the month. | The Dow Jones surged almost 11% on Tuesday, partly boosted by hopes of a cut, although it is still 16% lower than it was at the beginning of the month. |
| If the Federal Reserve's rate-setters decided to go further and halve rates to 0.75% it would take them to their lowest level since July 1958. | If the Federal Reserve's rate-setters decided to go further and halve rates to 0.75% it would take them to their lowest level since July 1958. |
| Some economists are predicting the bigger cut and suggesting that US rates could be on their way to zero, as happened in Japan when it was fighting deflation in the 1990s. | Some economists are predicting the bigger cut and suggesting that US rates could be on their way to zero, as happened in Japan when it was fighting deflation in the 1990s. |
| They have suggested that falling prices of commodities such as oil could send the consumer prices index negative in the coming months. | They have suggested that falling prices of commodities such as oil could send the consumer prices index negative in the coming months. |
| Deflation is a problem for economies because consumers delay any spending they can in the hope that products will be cheaper in the future. | Deflation is a problem for economies because consumers delay any spending they can in the hope that products will be cheaper in the future. |
| Strong orders | |
| The latest set of data that the Federal Reserve's rate-setters will be examining are the factory goods orders from the Commerce Department. | |
| Orders for long-lasting items manufactured in US factories were unexpectedly strong in September, rising 0.8%, following the 5.5% fall in August. | |
| Demand for commercial aircraft grew 29.7% while orders for motor vehicles rose 3%. | |
| Excluding transportation, orders were down 1.1% in September. |