Fed to meet for US rate decision

The Federal Reserve is preparing to meet to decide whether US interest rates should be reduced from 5.25%. Most analysts believe the Fed will cut rates to try and prevent a housing market downturn and the credit crunch from severely denting the economy.

By making money cheaper to borrow, people would spend and invest more, revitalising the economy, they say.

But some feel that the Fed must leave rates unchanged in order to focus on controlling inflation.

A reduction in rates by 25 or even 50 basis points would fuel inflation and lead to the “cheap money” conditions that have brought boom-and-bust to the property sector, they argue.,

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