Nov 16 2006
Economists think it’s looking more and more likely that the Federal Reserve will hold interest rates steady for quite a while, maybe through all of next year.
“I think the Fed being on hold through 2007 is an entirely plausible scenario,” said Chris Probyn, chief economist with State Street Global Advisors. The Fed voted in last month’s meeting to keep the fed funds rate, an overnight bank lending rate that influences rates on many types of loans, at 5.25 percent.
That was the third consecutive meeting that the Fed left rates unchanged after seventeen consecutive hikes from June 2004 through June of this year. Fed watchers said that as long as the economy continues to grow at a moderate pace, inflation will likely remain a threat. And that means that the Fed would not want to cut rates anytime soon. Investors, however, still appear to be betting on a rate cut sometime in 2007.
Rate cuts tend to spur economic growth and corporate profits, thus lifting stock prices. The Fed’s next meeting is set for Dec. 12.
It is expected Bank Negara Malaysia will follows by maintaining current interest rate.
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November 16th, 2006 by financetwitter
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