- Fannie Mae to Tighten Lending Standards: Report
- Share Trading on London Stock Exchange Resumes
- China Overcapacity Worsening, EU Chamber Warns
- Investing in Good Karma – and Making a Profit
- UK Retail Sales Pick Up in Nov., Strong Dec. Seen
- Black Friday to Avoid Red Ink; Greenback Gets the Blues
- Wal-Mart Price Pressure Hurts China Workers: Report
- Bankruptcies Jump, Hitting Highest Level in Four Years
- Steepest Black Friday Discounts, Revealed
- 4 Thanksgiving Week Buys For Your Portfolio: Market Pros
- There's a 'Great Chance' For a Double-Dip Recession: Strategist
- Revenge of the Gangsta Nerds
- Will TCU See The "Flutie Effect?"
- Retail Earnings and Sales to Improve in Q4: Analyst
- Consumers Catching the Holiday Spirit
- It's Beginning To Look A Lot More Riskless
- Crescenzi: Claims Level Suggests End to Job Losses
- Hedge Funds Take Early Lead in Warren Buffett's 'Big Bet'
MOST SHARED
- The Executive Job Search
- Chinese Overcapacity is Worsening, EU Chamber Warns
- Salvation Army's Kettles Now Credit Card-Ready
- US Mint to Suspend American Eagle Gold 1-Ounce Coins
- Gold Retreats from New High Above $1,194
- Wal-Mart Price Pressure Hurts China Workers: Report
- Oil Friday
- Hyundai-Kia Targets Rapid China Growth in 2010
- China Unveils Carbon Target Ahead of Copenhagen
Text Size 
Standard & Poor's expects the U.S. Federal Reserve to cut interest rates to 3.5 percent in 2008 to deal with the fallout from the housing market, S&P's chief European economist said on Wednesday at a banking conference in London.
"There is a good chance we reach about 3.5 percent for Fed funds ... by late summer 2008," Jean-Michel Six told investors. He said S&P now put the probability of a U.S. recession over the next 12 months at 40 percent and forecast economic growth of 1.8 percent in 2008.
"Below 2.0 percent for the U.S. is a very, very low speed, almost close to stalling."
He said the unemployment rate was the key factor in whether a recession would become more likely.
In terms of the housing market, S&P believes only half of the correction in prices has occurred so far. It expects house prices to fall 10 percent in total from peak to trough.
"There is much more pain, much more hardship ahead," Six said.
The Fed lowered its U.S. economic growth forecast sharply on Tuesday. It now projects U.S. growth to slow in 2008 to between 1.8 and 2.5 percent, sharply down from the 2.5 to 2.75 percent forecast in June, before picking up in 2009.
Minutes from the Fed's October meeting also showed its rate cut to 4.5 percent was a close call.
The Fed said it was unsure last month whether lower borrowing costs were needed to cushion the U.S. economy from a housing slump and credit woes but decided to cut interest rates as a form of insurance.
Print
Email
- For nearly three decades, these on-call experts have been dishing advice on how to – and not to – cook turkey.
- Ever wished your cab driver would stop nattering and just get to where you're going? Well that moment is near(er).
- Eric Schmidt pledges to create a virtual copy of the Iraq National Museum at Google’s expense.
- Bill Griffeth is taking a leave of absence from CNBC and Power Lunch for a year. Here's a message from Bill.
- More shoppers than ever plan to comparison-shop this season. Who will benefit?
- It may be the most unusual guide to business you'll read.
Data is a real-time snapshot *Data is delayed at least 15 minutes