Bernanke is Optimistic for Late ‘08

February 28, 2008

Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee on Feb. 14 that the central bank is likely to make fewer rate cuts in the immediate future.

Over the past six months, the Fed has cut rates by a total of 2.25 percentage points; but the aggressive moves have not done much to alleviate the credit squeeze. Bernanke said the economy is more likely to see the benefits of the rate cuts in the second half of the year, and analysts now say the markets still expect the Fed to cut rates at its next meeting on March 18 but do not expect it to be as aggressive in doing so.

The Fed "is signaling less rather than more in the way of future rate cuts and this is disappointing to those who feel more is necessary," says Richard DeKaser, National City Corp. chief economist.

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