Expected Fed Rate Cut Could Halt Crisis

Wall Street counting on help to boost falling stock prices

By Peter Fearon, Newser Staff

Posted Sep 17, 2007 3:49 AM CDT

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Expected Fed Rate Cut Could Halt Crisis — Traders work in the S&P 500 options trading pit at the Chicago Board Options Exchange in Chicago, Tuesday, Sept. 11, 2007. Wall Street held on to sharp gains Tuesday after Federal Reserve Chairman Ben Bernanke gave no clues about the central bank's intentions when it meets to discuss interest rates... (Associated Press)

What happens next in the volatile world stock markets could depend on Federal Reserve chief Ben Bernanke. The Fed is expected to cut the interest rates banks charge each other for overnight loans, currently 5.25%. It would make loans cheaper, boost consumer spending, revive stock prices and ultimately, prevent an economic slide, notes USA Today.

A one-quarter point cut is considered the most likely scenario when the Fed meets tomorrow, but some analysts expect a much bolder move aimed at creating a major economic upturn. "It's the most forecasted rate cut in history," warned one expert. "If they don't cut, expect a 500-point drop in minutes." (More Federal Reserve stories.)

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