Fed Waits to See Results of Rate Cuts, Tax Rebates

Is the Federal Reserve finished with its rate-cutting campaign, or is the economy in such bad shape that it will need more help in the future? The consensus is that the Fed is signaling a pause. It wants to see how the economy responds to seven interest rate cuts — and a hundred billion dollars worth of rebate checks.

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STEVE INSKEEP, host:

NPR's business news starts with a question about the next move on interest rates.

What we know is that the Fed cut interest rates yet again yesterday. They're down to 2 percent. And as usual, the Fed also issued a few words with that, giving signals perhaps about its next move. The consensus is that the Fed is signaling a pause in lowering interest rates. The Fed wants to see how the economy responds to seven interest rate cuts and $100 billion worth of rebate checks.

Not everybody agrees with that consensus, though, because Fed policymakers like to keep their options open. And yesterday's statement did note that economic activity remains weak and the Fed, quote, "would act as needed." We will learn more about how the economy is doing tomorrow when the April employment report comes out.

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