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Economy takes another turn for the worse

2008-05-22 15:03:31 (GMT) (Caymanmama.com - Business News)

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New York City, New York (CaymanMama.com) — CNN reported that new forecasts were released on Wednesday by the Central Bank which said that the Federal Reserve is expected to see more economic problems in near future. Despite that, the bank is unwilling to cut rates of interest any further, as per the last minutes of meeting released on Wednesday.

The Federal Reserve lowered its forecast of economic growth for the time being and simultaneously raised its ridges for unemployment and inflation. The grouping of rising prices and slowing growth has created a tough situation for the Fed which led to its decision regarding cutting of interest rates.

As a consequence of the minutes of meeting, the stocks fell further. Dow finished its day with a loss of over 200 points. The bank believes that the economic growth for this full-year will be somewhere between 0.3%-1.2%, in contrast with the previous forecast of January which was between 1.3%-2%.

The minutes of meeting suggested that the economy is going to shrink during the first 6 months of 2008. The chairman of Fed, Ben Bernanke, along with other bankers deems that there is recession in the economy. But some of the policy-makers have argued that the Federal Reserve has already cut interest rates and they should not be cut further unless there are further signs for significant weakening.



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