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Fed Makes Another Rate Cut to Boost Economy

For the second time in two months, the Federal Reserve cut key interest rates Wednesday. A financial analyst describes what the Fed's decision may mean for the American economy.

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  • JEFFREY BROWN:

    Even in recent days, there have been conflicting signs about the health of the economy, and the Fed said it weighed those different considerations today.

    On the positive side: solid economic growth and calmer financial markets. On the down side: a potential slowdown in economic expansion and growing concerns about inflation.

    We parse the words and numbers now with David Wessel, economics editor of the Wall Street Journal.

    Welcome.

  • DAVID WESSEL, Wall Street Journal:

    Thank you.

  • JEFFREY BROWN:

    Start on the growth area. What were they seeing that worried them?

  • DAVID WESSEL:

    Well, the Fed came into this meeting today knowing that the economy was pretty strong in the third quarter. The government said today it grew at a robust 3.9 percent rate, but the housing problem is a lot worse than people anticipated.

    So housing is worse. Oil prices are higher, and that can have a depressing effect on the economy. And there are some signs that this credit crunch is beginning to bite in other parts of the economy besides mortgages.