The Federal Reserve may lower interest rates for the second time in nine days and indicate a readiness to go further if the economy deteriorates.
The Federal Open Market Committee, ending a two-day meeting today, will probably follow the Jan. 22 emergency reduction with a half-point cut in its benchmark rate, according to 48 of 85 economists surveyed by Bloomberg News. Such a move would bring the rate to 3 percent.
Officials may cite “appreciable” risks to growth, a word used for the first time last week, avoiding what analysts said were the mistakes of 2007’s statements. Through December, the FOMC referred to “inflation risks,” confusing some investors about its intentions. To avoid the impression of a blank check, Chairman Ben S. Bernanke will also seek language that notes the cumulative cuts since September, Fed watchers said.
“The statement will have a soft bias,” said Brian Sack, a former research manager at the Fed’s monetary affairs division, and now senior economist in Washington at Macroeconomic Advisers LLC. “It certainly won’t promise additional rate cuts, but it will talk enough about downside growth risks to leave that option open.”
The Fed’s announcement is scheduled for about 2:15 p.m. in Washington. While most economists predict a half-point move, 21 in Bloomberg’s survey forecast a quarter-point cut, one called for 0.75 percentage point and 15 saw no change.