Fed Reserve expected to cut rates

The Federal Reserve is expected to cut interest rates by a modest quarter percentage point today and may suggest the rate-cutting…

The Federal Reserve is expected to cut interest rates by a modest quarter percentage point today and may suggest the rate-cutting cycle it kicked off last fall has reached an end.

The Fed will announce its decision on rates and offer an assessment of threats facing the economy at around 7.15pm (Irish time).

The central bank's decision may be shaped in part by a government report on US gross domestic product due just hours earlier. Analysts expect the report to show the economy expanded at a miserly 0.2 per cent annual pace in the first quarter.

Fed policy-makers, who opened a two-day meeting yesterday, confront a bleak landscape with an economy moving sideways at best, elevated prices for food and fuel, a deep housing downturn and lingering malaise in financial markets.

The Fed has cut benchmark overnight rates to 2.25 per cent from 5.25 per cent since mid-September.

While a further quarter point reduction is widely expected, interest rate futures prices imply a small probability that rates will be held steady.