After a Long Pause, Another Cut

Chart of the Week for November 8-14, 2002

According to forecasts late last year, both economic activity and interest rates were supposed to be higher by now. But in the face of several weak readings on the economy, the Federal Reserve instead cut interest rates 50 basis points Wednesday. And, Fed officials changed their policy bias from weakness to neutral, meaning they believe risks are now equally weighted between further economic decline and inflation. According to their statement, low interest rates and productivity gains should be enough to right the recovery and spur economic growth.

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