Greatly reduced inflation pressures and a desire to spark some life into the economy has almost everyone expecting the Federal Reserve to cut its benchmark overnight interest rate from 1% to 0.50%, marking the lowest level on records dating to July 1954.
Plummeting energy prices have taken the sting out of inflation since crude prices tumbled off their record peak near $147 per barrel in July — also when inflation was at its highest for the year. New York crude-oil for January delivery settled to $46.28 a barrel, falling $1.70 on Friday.
Consumer prices dropped a record 1% in October. The Labor Department reports on Tuesday the November CPI, which is the most watched government inflation barometer. Economists expect another record decline to 1.4%. Add in Friday’s report by the government showing producer prices fell to 2.2% and the Fed has an enormous green light to lower rates with little regard for inflation. Continue reading Fed seen lowering rates toward zero without inflation worries