Fed rate cut may not be enough to stop recession

09/4/2007 | NYTimes.com · Wall Street Journal, The

Federal Reserve Chairman Ben S. Bernanke said Friday that the central bank would act "as needed" to keep the economy from sliding into a recession, but analysts and some policymakers don't think additional interest-rate cuts will be enough to stop recent market turmoil. Investors have been spooked, and cheap credit has all but disappeared in recent weeks, meaning a rate cut could be too little, too late. The tight credit market is "not going to be affected by a small change in the federal funds rate," said Edward E. Leamer, professor of management at the University of California, Los Angeles.

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