Alan Greenspan is about to start tinkering with the interest rate again. In the two and a half years, the Federal Reserve has reduced the rate twelve times. Twelve. And if the financial analysts are right, the chairman of the fed is ready to cut once again. If he does, the cost of borrowing money will be its lowest level since Eisenhower was in the White House and Edsel’s were the Ford Motor Company’s hope for the future.
But faced with a cruel job market, and the more menacing prospect of a Japan-style, deflation-triggered, economic meltdown, many analysts warn that the Fed’s next move has risk attached. But nothing else is working, and options are few. So Greenspan is likely to cut, and wait, wait for signs of life that have largely eluded an American economy. Figuring out the Fed’s next move.
Allen Sinai, Chief Global Economist and President of Decision Economics. Previously, Chief Global Economist of Lehman Brothers
Peter Crane, Vice President and Managing Editor of iMoneyNet
Ben Edwards, U.S. Business Editor for The Econonomist, previously the magazine’s bureau chief in Tokyo.