Newspaper article The Evening Standard (London, England)
America Poised to Trim Rates to Avoid Recession; Crunch Point: Ben Bernanke Is Expected to Order the Federal Reserve's Third Reduction in the Cost of Borrowing in a Year to Boost the US Economy and Ease the Effects of the Credit Crisis
Byline: HUGO DUNCAN
AMERICA'S central bank is expected to cut interest rates today in a bidto stave off recession as the credit crunch claimed yet another round ofvictims in London.
Economists predict a quarterpoint rate cut to 4.25% by the Federal Reservealthough there is also hope of a half-point reduction to boost economic growthand ease the impact of the housing crash and credit crunch.
Mike Lenhoff of Brewin Dolphin said: "A quarter-point off the Fed funds ratetoday is the consensus call but our view has been that the Fed couldshouldcut by a half-point. Aside from the money markets, which are not functioning, afundamental case is building in the US that justifies a half-point cut." Itwould be the third reduction this year by the Fed, led by Ben Bernanke, whichhas already slashed rates from 5.25% amid growing fears that the world'slargest economy is on the verge of recession.
A US recession would be highly damaging for the global economy, and London feltthe pain of the pending slowdown again today as bankers at ABN Amro Rothschildand Dresdner Kleinwort faced losing their jobs.
ABN Amro Rothschild, the equity capital markets business set up between theDutch and London banks a year ago, looks set to unwind following the takeoverof ABN by Royal Bank of Scotland.
Up to 154 people would be affected although a spokesman pointed out that as a"virtual" partnership, most of the bankers involved would end back at one orother of the partners.
German investment bank Dresdner last night axed 60 jobs in its London-basedcredit business just days before bonuses were due to be announced. It isexpected to shed a further 150 across the group in the coming weeks. …