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Strategies & Market Trends : Coming Financial Collapse Moderated -- Ignore unavailable to you. Want to Upgrade?

To: EL KABONG!!! who wrote (377)	6/27/2001 9:19:01 PM
From: EL KABONG!!!	Read Replies (1) \| Respond to of 974

dailynews.yahoo.com Wednesday June 27 6:22 PM ET POLL: Fed Almost Done Cutting Rates By Marjorie Olster NEW YORK (Reuters) - The Federal Reserve (news - web sites)'s aggressive campaign of interest rate cuts to ward off a U.S. recession is nearing its end, leading Wall Street dealers predicted in a new Reuters poll on Wednesday. Seventeen of the 25 primary dealers of U.S. government securities concluded the Fed will make only one more quarter-point reduction in the benchmark federal funds rate this year when central bankers next meet in August. The poll was conducted after the policy-setting Federal Open Market Committee (news - web sites) (FOMC) lowered the funds rate on overnight bank lending from 4.0 percent to 3.75 percent, its sixth but smallest cut so far this year. The cuts have brought the fund rate down by a total of 2.75 percentage points. All but two of the 25 firms who deal directly with the Fed in money market operations predicted another quarter percentage point cut in the funds rate at the next FOMC meeting on Aug. 21. Two said there would be no move. Though the Fed signaled on Wednesday that it may still need to lower rates further, it slowed its aggressive pace of rate cutting seen from January to May. Those five months saw the Fed quickly slash the funds rate in five half-point moves. ``The important point is they are close to the end of this,'' said Richard Berner, chief economist at Morgan Stanley. U.S. growth slowed dramatically in the second half of last year and the Fed sprang into action in early January to try to keep the economy from slipping into a recession. So far, the Fed, the White House and most on Wall Street are betting the country will narrowly skirt a recession. The dealers polled saw a 35 percent chance of recession this year, down from 39 percent in a May poll. But economists who closely track business cycles said this week that they see many of the telltale signs of past recessions in an eight-month decline in industrial production and a two-month decline in payroll employment. The nation's arbiter of recessions, the National Bureau of Economic Research, said last week it was possible a recession began recently, its first such warning in this downturn. But optimists say consumer spending and confidence and the housing market have been resilient enough to offset the manufacturing slump and mounting job losses. The great hope is that the Fed's aggressive action will make for a relatively short-lived downturn. The FOMC statement mentioned prominently that Fed rate cuts so far this year have totaled 2.75 percentage points, or 275 basis points. Wall Street economists saw this as an allusion to the idea that there is already a good deal of economic stimulus in the pipeline which may not have yet had its full impact. Fed officials also expect consumer spending to benefit in the second half from tax refunds in the next few months, part of a package of tax cuts passed recently by the U.S. Congress. ``They do not mention tax cuts, but you have to suspect that was also on their mind. They emphasized that they have eased a total of 275 basis points this year,'' said Michael Moran, chief economist at Daiwa Securities International. KJC