U.S. Likely Cut Interest Rate Again by 0.5 Percent

The U.S. Federal Reserve Board (FRB) convenes today the Federal Open Market Committee (FOMC) to discuss the issue of interest rate cut following the recent aggravation of economic situation.

The U.S. press forecasted that the FRB would reduce the interest rate from the current 2.5 percent to 2 percent, because the jobless rate soared from 4.9 percent in September to 5.4 percent in October to record the highest increase for the past 21 years, and the GDP growth rate marked –0.4 percent in the third quarter, reflecting the increased possibility of economic slump.

The Reuter surveyed on 24 economic experts in Wall Street, in which 15 respondents expected the interest cut of 0.5 percent, and 9 respondents foretold 0.25 percent cut.

The FRB has trimmed down the interest rate nine times in this year, including two-time reduction by 0.5 percent after the 9.11 terrorist attacks. As a result, the standard interest rate of the FRB dropped from 6.5 percent in the beginning of this year to the current 2.5 percent, which is the lowest figure since May in 1962.

eligius@donga.com