Tenth U.S. Interest Rate Cut Possible In November

Compiled ByJohn S. McClenahen Nine months after it began pumping money into a slowing U.S. economy through a series of cuts in the influential federal funds rate, the Federal Open Market Committee (FOMC) believes the risks of continued weakness still outweigh the risks of inflation. "The terrorist attacks have significantly heightened uncertainty in an economy that was already weak. Business and household spending, as a consequence, are being further dampened," say Chairman Alan Greenspan and his FOMC colleagues. Their statements leave open the possibility of a tenth rate cut at the next scheduled FOMC meeting on Nov. 6. The federal funds rate is now at 2.5%, a stunning 350 basis points below its Jan. 3 rate of 6% and 400 basis points below the 6.5% rate of a year ago. The federal funds rate is the interest banks charge each other for overnight loans. And the FOMC has made nine cuts in the rate this year. Both the National Assn. of Manufacturers and the U.S. Chamber of Commerce, two major Washington-based business groups, applaud the lower rates. "The Fed is steadfast in its efforts to get the economy moving," observes Martin A. Regalia, chief economist at the U.S. Chamber. "Clearly, the Federal Reserve is committed to doing whatever it takes to get our economy moving again," notes an approving Jerry J. Jasinowski, NAM's president.