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The Federal Reserve has cut its forecast for economic growth in the US next year and warned of higher-than-expected unemployment, but minutes of the last interest rate policy-setting meeting provided few clues as to the central bank's next move.
Members of the federal open market committee (FOMC) said that their Halloween rate cut had been a "close call" and there was more discussion than usual about inflationary pressures caused by the weak dollar.
However, all but one member voted for the quarter-point reduction, and economists noted that most of the time was spent fretting about potential damage from the credit market crisis.
Financial markets are still predicting a further rate cut at the next Fed meeting, which would come on top of 75 basis points of easing since the credit crisis took hold in the northern summer. However, subsequent policy speeches by FOMC members have poured cold water on hopes for another cut. The dollar fell to a record low of US$1.48 against the euro after the release of the minutes and the downbeat forecasts.
- Independent
