J.P. Morgan sees Fed cutting funds rate to 0% by end-January

SAN FRANCISCO (MarketWatch) — J.P. Morgan Chase & Co. economists said late Wednesday they now expect the Federal Reserve to make two half-point cuts to its fed funds rate, currently at 1%, by the end of January, bringing the fed funds rate to 0%. The U.S. central bank will then hold this benchmark rate at 0% for the rest of 2009, they said. “The change in our call is motivated in large part by the risk that deflation becomes more likely in an environment where labor market slack is building, and ongoing financial tightening is delaying the prospect that slack begins to get worked down,” wrote Michael Feroli, U.S. economist for J.P. Morgan. The bank previously projected the central bank would cut rates by a quarter-point in December, to 0.75%, and then hold rates at that level.
Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as […]

Original post by Forextvblog

This entry was posted on Thursday, November 20th, 2008 at 9:47 am and is filed under Daily Forex Analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.