WASHINGTON – Federal Reserve policymakers are expected to stand pat on interest rates at their meeting this week, which may set them up for bigger rate cuts later this year if the economy continues to slow, analysts told Bloomberg News.
The members of the Federal Open Market Committee are likely to debate changing their bias toward tighter credit when they meet tomorrow and Wednesday, economists told Bloomberg, and they may add language to the FOMC’s statement underscoring their concern about recent weakening in several economic indicators.
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A rate cut at this meeting is considered unlikely, however, since Chairman Ben S. Bernanke and at least six others on the FOMC have said they want to slow inflation to between 1 and 2 percent – a rate the Fed hasn’t achieved since March 2004.
“The Fed is often a little behind the curve when you get to these turning points,” J. Alfred Broaddus Jr., who served as president of the Richmond Fed from 1993 to 2004, told Bloomberg. But, said Dominic Konstam, head of interest-rate strategy at Credit Suisse Holdings in New York, “The longer the Fed remains on hold, the more likely it will have to cut rates – and by more – later.”
