Fed Weighs Pause After Next Rate Cut

Wall Street Journal (04/24/08) P. A1; Ip, Greg; Kingsbury, Kevin
The Federal Reserve has cut the federal-funds rate to 2.25 percent from 5.25 percent, amounting to seven reductions over a span of eight months, and experts anticipate another 0.25 percentage point cut at its April 29-30 meeting. However, experts think the central bank could take a breather after the next rate cut to give officials time to assess the impact of rate reductions, upcoming tax rebates and other measures on the economy during the latter half of the year. Moreover, there are concerns that further reducing the federal funds rate could increase inflationary pressure and weaken the dollar even more. Despite rising food and oil prices, officials point to some improvements in the financial markets, with the 30-year mortgage rate on the decline; but they note that stricter lending standards could worsen the downturn. The statement issued by the Federal Reserve after its meeting likely will point to ongoing concerns about economic growth and inflation and state that additional rate cuts will be made as necessary.