Fed expected to cut rates again

WASHINGTON (AP) -- The Federal Reserve on Tuesday is widely expected to cut a key interest rate for a third time this year. The concern continues to involve the troubles in the housing and credit markets.

It's the last meeting of the year for Fed Chairman Ben Bernanke and his fellow central bankers.

Analysts look for the Fed to trim its key rate, now at 4.5 percent, by one-quarter of a percentage point. Some have speculated about the possibility of a half-point cut.

If the Fed cuts its key rate, commercial banks would lower their prime lending rate, now at 7.5 percent,by a corresponding amount. The prime rate applies to certain credit cards, home equity lines of credit and other loans.

The rationale behind the lower rates is that they will induce consumers and businesses to boost spending, supporting the economy.

(Copyright 2007 by The Associated Press. All Rights Reserved.)


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