More interest rate cuts from the U.S. Fed? Depends on the data.

November 29, 2007 - Forex Economic News

United States Fed Chairman Ben Bernanke spoke in Charlotte, North Carolina on Thursday and provided a glimpse that another interest rate cut could take place in December. Despite rate cuts in September and October and indicating that those cuts should be enough for the economy to keep growing, albeit slowly, thursday's speech highlighted volatility in the financial markets and credit tightening as obstacles to economic growth. Bernanke explained the Fed's economic outlook has "been importantly affected over the past month by renewed turbulence in financial markets" and "further tightening in financial conditions" could dampen economic growth.

While not forecasting a rate cut, Bernanke stated that "the current stresses in financial markets make the uncertainty surrounding the outlook even greater than usual." The Fed will be keeping a close eye on the upcoming data(jobs, household income, spending) to gauge the risks to inflation and economic growth and "will take full account of the implications for the outlook of both the incoming economic data and the ongoing developments in the financial markets" before deciding whether to cut rates. Read the full report here.

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