Fed may Cut Rates Again

The Dollar is still reeling from the 50 basis point rate cut imposed by the Fed last month. Nonetheless, some analysts are predicting that the Fed will cut rates again on October 31, this time by a quarter of a percentage point, to 4.5%. The looming fall in real estate prices (termed the sub-prime crisis) has officially spread to the rest of the economy, and the Fed is trying to preempt a complete collapse in investor and consumer confidence. Experts remain divided as to whether the Fed will cut rates now or next month. Either way, you can expect the Dollar to drop to fresh lows against the Euro. Thomson Financial reports:

“The combination of weak US data, rising expectations of aggressive Fed easing and a stable, albeit fragile, Wall Street is a perfect recipe for euro-US dollar and Australian dollar-US dollar strength,” said one analyst.

Read More: US dollar hovers near all-time low vs euro on chances of Fed rate cut