Projo Biz Blog

WASHINGTON -- The Federal Reserve is likely to follow its bold action last week to battle an economic downturn with further interest rate reductions, although analysts are split on just what size the future cuts will be.

Some believe the Fed will settle into a series of quarter-point moves, especially if upcoming economic reports show the economy is slowing but not toppling into an actual recession.

That would mean the Fed will cut its federal funds rate, the interest that banks charge each other, by a quarter point at the conclusion of today's meeting. It would be the fifth rate cut since last September.

Last week, the Fed announced a surprise three-quarter-point cut which drove the funds rate down to 3.5 percent. It was the largest reduction in this rate in more than two decades and the first change in the funds rate between meetings since the immediate aftermath of the September 2001 terrorist attacks.

Read the full Associated Press story.

---