Azerbaijan, Baku, 2 May /corr. Trend A.Badalova / The U.S. Federal Reserve System will slash rates to only 1.0% by the end of the summer, regardless of what it says now, said the chief economist on the USA of the British leading independent macroeconomic research consultancy Capital Economics Ltd, Paul Ashworth.
"We suspect that the Fed will be just as much a slave to the incoming economic data and financial
market developments in the next few months, as it have been over the past six months. As the full severity of the current recession becomes apparent, we expect the Fed to slash rates to only 1.0% by the end of the summer, regardless of what it says now," Ashworth reported to Trend .
This week, a next meeting of the U.S. Federal Reserve System took place which made a decision to decrease the rates by 25 base points up to 2% annually. Since the mid September, the rates have been decreased by seven times to prevent the impacts of crisis in the mortgage market of the United States. The current rate of the federal financing was the minimal since December 2004.
The decision of the Federal System fully coincides with the expectations of the analysts, several participants of the market consider that this decrease will be final, and increase tendency will be observed by the end of 2008. Despite that the System stated that this decrease may be final, it also highlighted the continuing tension in the financial market, toughening of the crediting situation and strengthening of the fall in the housing market.
Speaking on the continuous high prices for the energy and other commodities, the British economist said that the prices will fall back soon easing near-term inflationary pressures and leading to a drop back in inflation expectations as well.
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