Fed meets over interest rates, one merchant weighs in - WALB.com, Albany News, Weather, Sports

Fed meets over interest rates, one merchant weighs in

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December 11, 2007

Albany --  For the third time since September the Federal Reserve Board will meet today to discuss trimming the key interest rate. Some analysts have predicted the be cut be as low as half a point.

Federal Reserve Chairman Ben Vernanke is expected to announce the third rate cut of the year. Amid talks of a half point cut, it is most likely the current key rate will be trimmed by 4.5 percent to 4.25 percent; in an attempt to dodge an all out recession.

Amy Wiard, who operates Amelia's Market, a 20,000 square foot antique store in Lee County, was like many small business owners, concerned that retail sales would be low this Christmas.

"I think that's with any small business. And two being in our new location, a little off the beaten path. And we were worried about that," said Wiard.

But Wiard says she's see no indication of a slow down in sales. "Traffic has been fantastic. We've exceeded our sales from last year, so we're very pleased."

But worry was certainly not unwarranted, after all the housing slump coupled with high oil prices have taken a toll on the economy. But amid talks inflation, the Federal Reserve Board is expected to trim the key rate by a quarter point to 4.25 percent.

"They don't want inflation. That's the big thing they're worried about. Now that the economy has slowed down with the higher rates, when you factor in oil prices and all the factors which have slowed the economy a little bit more, they're now going the other direction by cutting rates to try and juice it up a little bit," said A.G. Edwards & Sons investment broker Vic Sullivan.

Some analysts predict amid the holiday shopping season that the rate cut could be trimmed up to half a point, but others have suggested it may not be changed at all. What remains likely is that the quarter percentage rate change will be one of three recent attempts by the Fed to stimulate the economy.

"Maybe these inflation numbers that are the highest we've seen in a couple of areas may not be here to stay for the longer term. Now they're back again focusing on what they can do to help the economy now," said Sullivan.

Now there is some good news for the economy to go along with the cut in interest rates, amid date showing an increase in jobs across the U.S. , analysts are paying very close attention to the holiday shopping season which may beat predictions of slower than normal sales period. So it will certainly be interesting to see how this works out.

The Federal Reserve Board Chairman is expected to make that announcement around 2:00PM.

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