Another Fed rate cut expected today

Another Fed rate cut expected today
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The rate-setting arm of the U.S. Federal Reserve Board steps up to the plate today for the second time this month after making an emergency rate cut just three weeks ago.
Investors are betting the Fed will lower the federal funds rate by half of a percentage point to 1 per cent, matching the size of the cut it made earlier this month in a co-ordinated action with other central banks.
"It will signal they are concerned about [the credit crunch] spilling over into the real economy," said Mark Chandler, a fixed-income strategist with RBC Dominion Securities Inc. "They will go to 1 per cent and keep their fingers crossed."
The Fed had been expecting the unemployment rate would rise to a 5.3-per-cent to 5.8-per-cent range, but now the consensus is for 6.8-per-cent unemployment, and that is even probably too low, Mr. Chandler said. "That tells you how fast the real economy is deteriorating."

Nevertheless, some economists say a cut of a quarter of a percentage point is not out of the question, especially if the Fed indicates it is leaning toward a follow-up rate cut.