Interest Rates and the Federal Reserve

The Federal Reserve is expected to reduce interest rates to historic levels in December, matching a prediction I made twenty-six months.

Two months ago, Fed Chairman Ben Bernanke announced the Fed would not reduce rates anymore. I said hogwash and wrote on these pages that he would slice rates even more, and to no avail. But he has no choice.

Currently, the federal funds rate sits at one percent. The Fed is running out of bullets to combat this recession, which some whackos think the U.S. has not yet gone into. There is a good chance the Fed may reduce the Federal Fund Rate to zero before the spring.