Federal Reserve officials meet this week to consider cutting US interest rates to levels not seen since 1958 - when Elvis Presley entered the army - but they seem likely to hold off in hopes war jitters end soon.
Recent economic news has been bleak but public comments from many policymakers indicate that they see unease caused by the long run-up to a potential US military strike on Iraq as the main culprit.
While some analysts think the central bank will be unhappy enough with the data to trim rates tomorrow, most think policymakers will wait to see if a US strike on Iraq helps calm fretful consumers and businesses.
"I think the 18th of March is probably a poor day to make the decision to change interest rates," said Mr Doug Lee of Economics from Washington, which helps money managers understand how policy decisions affect markets. "They would really like to see what happens in the first week or two before making a commitment."
If the Fed opts to hold rates steady and events in the Middle East unfold poorly from a US perspective, analysts say Fed chairman Mr Alan Greenspan may well be at the ready with his finger on the interest-rate trigger. But most are betting he won't need to pull it.
Of the 22 major Wall Street firms that deal directly with the Fed in the markets, a slim majority - 13 to nine - told Reuters that rates at their current four-decade low should prove sufficient to foster recovery.
The rate-cutting suspense comes after a slew of recent data, including the shocking loss of 308,000 jobs in February and a fall in retail sales, showed an economy at a near-standstill.
But many economists and Fed officials pin the weakness on harsh weather and growing war fears.
"You've had several Fed people who have made it pretty clear that they thought if we got the Iraq conflict behind us the economic outlook might be quite a bit brighter," Mr Lee said. "Let's hope they're right."
The Fed has cut the benchmark overnight rate a dozen times since early 2001, taking it to just 1.25 per cent in an effort to breath life into an economy suffering a hangover from the late-1990s stocks and investment-spending boom.
With interest rates so close to zero, the Fed has had to give some thought to what it might need to do if further rate cuts fail to jolt the economy, although they have said this is unlikely to be an issue. However, they have noted that there are other stimulus methods available such as the purchase of long-term debt securities. - (Reuters)
