Fed cut 'not the last'

WASHINGTON -- US policymakers will need to cut interest rates again to cushion the blow of global turmoil on the world's biggest economy, but they might not avert a market collapse, the Organisation for Economic Cooperation and Development said in its twice-yearly report.

It expected the federal funds rate would be reduced to 4.50 per cent in 1999, and even lower if global financial turmoil deepened.

Despite the cut to 4.75 per cent in the overnight rate, the OECD warned that the US stock market could come under renewed selling pressure as corporate profits erode. A major selloff could undermine already fragile investor confidence and push the US economy toward recession, it said.

* The Paris based organisation is forecasting that New Zealand's growth rate will be above average in 1999 and 2000.


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