Daily Real Estate News  |  December 10, 2007  |   Fed Expected to Cut Key Rates on Tuesday
The Federal Reserve is poised to cut its key rates again when it meets Tuesday.

The predicted reduction by as much as a half point in the wake of a credit crisis caused by investments in subprime mortgages has left some analysts skeptical about the Fed’s role in financial markets.

Some critics say lowering rates means the Fed is bailing out investors and encouraging more sloppy decision-making.

Janet Yellen, president of the Federal Reserve Bank of San Francisco, said: "We face a risk that the problems in the housing market could spill over" and sap consumer spending "in a bigger way" than anticipated.

William Poole, president of the Federal Reserve Bank of St. Louis, puts the situation more bluntly. "It makes no sense to let the economy suffer from continuing declines in stock prices for the purpose of `teaching stock market speculators a lesson,'" he says.

Source: The Associated Press, Jeannine Aversa (12/09/2007)