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Experts Hope Rate Cut Nudges Credit Open

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The Tampa Tribune

Published: October 28, 2008

NEW YORK - The still-cinched credit markets are anticipating a half-point interest rate cut from the Federal Reserve this week, but investors are worried it won't be enough to quickly revive the economy.

The Fed has been slashing rates and taking unprecedented action to get market participants back in the lending mood, including launching a facility Monday to buy short-term corporate debt known as commercial paper.

At its meeting Wednesday, the central bank is expected to reduce its key rate to 1 percent. From there, policymakers have little room to lower rates further.

Libor, the London Interbank Offered Rate, is the average rate banks charge one another for loans. It edged lower Monday, indicating credit remains tight.

Christopher S. Rupkey, chief financial economist in Bank of Tokyo-Mitsubishi UFJ's economic research group in New York, said he hopes Wednesday's Fed action will be "the final blow that brings Libor down here. They're running out of ammunition."

The Associated Press

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