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December 16, 2008    

Record low interest rates expected in US

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by Kay Murchie

The Federal Reserve is expected to cut interest rates later today in the US from the current level of 1% to 0.5% or even 0.25%.

The Fed has made aggressive cuts since September last year, when rates stood at 5.25%.

A further cut is expected as figures have revealed that US consumer spending has plummeted, while US industrial output dropped 0.6% in November, with manufacturing down 1.4%.

The recent news is sure to be an incentive to cut interest rates even further, according to economists on Wall Street.

According to Graham Turner at GFC Economics, this week’s meeting at the Federal Reserve is the most important since April 1932.

However, other action could include buying debt backed by home loans, in the hope of stopping the continuing decline in the housing market, say analysts.

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