March 17, 2008 | posted by Michael Baxter in US economy |

Give the Fed credit where it’s due.  It’s not being shy.

Yesterday was of course Sunday, a day of rest for central bankers –  if markets can be sure of one thing, it is this: the Fed won’t mess about with the rate of interest on a Sunday.

Well yesterday, that idea went out the window, for on Sunday 16 March, the US Federal Reserve cut the rate of interest at which it lends to financial institutions from 3.5 to 3.25 per cent.

You may know, there is more than one  interest rate set by the Fed.  The headline rate still stands at 3 per cent.

Julian Jessop, Chief International Economist said, “The most worrying aspect is that the Fed felt it could not wait until its scheduled one-day meeting tomorrow. Perhaps if it had announced these measures on Tuesday they would have been more favourably received. As it is they seem like panic.”

It is thought the Fed could knock as much as a full percentage  point off interest rates tomorrow – knocking the main rate down to 2 per cent.  Many economists are now saying US interest rates could hit zero per cent this year.