Fed faces crossroads as it weighs third rate cut
By Sylvan Lane
The Federal Reserve is expected to cut interest rates for the third consecutive meeting Wednesday to boost a slowing economy despite growing concerns it could be depleting its arsenal of tools to fend off a recession. The Federal Open Markets Committee (FOMC), the Fed’s policymaking arm, finds itself at a difficult crossroads ahead of the Tuesday start of its two-day October meeting. …“They’re already very close if not below the real inflation-adjusted zero lower bound,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics, referring to the level at which interest rates are effectively equal to zero. “What I would call ultra-accommodative policy gives the Fed very little ammunition with which to counter a real macroeconomic slowdown,” Petrou continued.