No More Fed Rate Cuts, Says Moody's: Report
The U.S. Federal Reserve cannot lower interest rates at the moment, given high oil prices and the spectre of inflation, John Lonski, chief economist at Moody's rating agency, told La Repubblica newspaper.
"To stimulate a recovery, you need another reduction in rates, but the Fed cannot allow itself to do that at the moment," Lonski said in an interview published on Monday in the newspaper's financial section.
"How can it (cut) with the price of oil at these levels, inflation threatening round the corner, the dollar which continues to fall?" Lonski said.
He said the Fed and the European Central Bank should coordinate actions.
"If the (ECB) can avoid raising (rates), it would be doing the rational thing." Lonski added that the U.S. housing market still had not finished falling.
"Conditions for a recovery in the housing market are not even there in the distance," he added, "the crisis has not yet touched bottom."
"No-one will risk buying a house anywhere in the United States ... especially because they think ... if they wait longer they will find it at a lower price. In a year, it's highly likely the same house will have lost another 10-15 percent in value," Lonski added.