A lot has changed since the US Federal Reserve hinted two months ago it might be finished cutting interest rates for a while. Credit has become harder to obtain, Wall Street has convulsed again and the housing slump has intensified.
As a result, policymakers at the central bank now appear to have changed their minds about the need to drop interest rates again.
The Fed had cut rates twice this year and officials suggested in October that might be enough to help the economy survive the credit and housing stress. Then the problems snowballed, leading Fed Chairman Ben Bernanke to signal one more cut might be needed.
Analysts expect the Fed to trim its key rate, now at 4.5 percent, by one-quarter of a percentage point at the meeting tomorrow.
Banks, financial companies and other investors who made loans to people with spotty credit or put money into securities backed by those subprime mortgages have lost billions of dollars. Investors in the US and abroad have grown more wary, thereby aggravating the credit crunch.
This has added to the turmoil on Wall Street and Fed officials say they must take it into account when deciding their next move to keep the economy growing and inflation low and promote a stable climate that benefits investors.
The Fed will also be trying to ensure the banking system is sound and financial markets run smoothly.
But some may believe that lowering rates means the Fed is bailing out investors and encouraging firms to make bad decisions.
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan
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