Fed expected to slash interest rates

first_imgWASHINGTON – For the first time in more than four years, the Federal Reserve appears ready to lower interest rates to prevent a housing meltdown and a painful credit crunch from driving the economy into a recession. A rate cut would affect millions of borrowers, with the intention of getting them to spend and invest more, which would revitalize the economy. In one of their most important and anxiously awaited decisions, Fed Chairman Ben Bernanke and his central bank colleagues meet Tuesday to determine their next move on interest rates. Those policymakers are widely expected to cut an important rate, now at 5.25 percent, by at least one-quarter of percentage point. Some analysts predict a bolder step, a half-point reduction. If the Fed drops the rate, then the prime lending rate that commercial banks charge many individuals and businesses would fall by a corresponding amount. It now is at 8.25 percent. Less immediate would be relief for the country’s economic health. An expected series of rate decreases could take three months to nine months before rippling through the economy and bolstering activity. “It’s like taking an antibiotic. After you take the first dose, you don’t feel immediately better. But after a series of dosages accumulate, there will be a more positive effect,” explained Stuart Hoffman, chief economist at PNC Financial Services Group. Over the short term, a rate cut would provide an important psychological boost. It could make investors, businesses and others less inclined to clamp down or make drastic changes in their behavior that would hurt the economy. Fears that the deepening housing slump and a spreading credit crisis could short-circuit the six-year-old economic expansion have shaken Wall Street over the past few months. Stocks have swung wildly, with sharp drops reflecting investors’ bouts of panic. A recent government report showing that the economy lost jobs for the first time in four years delivered a fresh jolt. The biggest fear is that individuals and businesses will cut back on spending, throwing the economy into a tailspin. By Zandi’s odds, there now is a 40 percent chance the economy will fall into a recession – the highest probability since the last recession, in 2001. Just two months earlier, Zandi believed there was only a 12 percent chance. So far, though, consumers have not cracked. Retail sales rose a modest 0.3 percent in August, after a 0.5 percent gain in July, the government reported Friday.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! “It’s no longer a debate over whether they will ease but by how much,” said Mark Zandi, chief economist at Moody’s Economy.com. “The economy is soft and getting softer,” and the Fed has come under economic and political pressure to act. Should the Fed go with a quarter-point cut, analysts expect policymakers will lower the rate again in October and in December, their final meeting of the year. Fed action would mean that borrowers who can obtain credit would see rates drop on a variety of loans. It would become less expensive for people to finance certain credit card debt and for homeowners to take out popular home equity lines of credit, which often are used to pay for education, home improvements or medical bills. Also, it should help some homeowners whose adjustable-rate mortgages reset in the fall. “Borrowers facing a rate reset Oct. 1 might see their ARM rates adjust to 6.7 percent, for example, rather than the 7.5 percent that a borrower whose loan adjusted back on July 1 experienced,” said Greg McBride, senior financial analyst for Bankrate.com. “Still a big increase, but not the knockout punch it could have been,” he said. last_img read more

Read More →

Cigarettes could go up to €30 a packet

first_imgTo mark World Cancer Day yesterday, the Irish Cancer Society (ICS) have urged the Irish government to raise the prices of cigarettes to €30 by 2020.Currently, a packet of cigarettes costs $25 (€17.60) in Australia, with the Australian government vowing to hike the price up to $40 (€28.50) by 2020.The Irish Cancer Society are urging the Irish government to follow suit. The ICS have highlighted that smoking causes one in four cancer-related deaths, and that raising tobacco taxes are one of the most effective ways to reduce the number of people who smoke.2,860 people die each year in Ireland due to the harmful effects of smoking.Although cigarettes are now over €11 a packet in Ireland, the ICS want to see them becoming more expensive as it will deter young people from picking up the habit.Eurostat figures show that as of December 2016, Ireland had the second highest tobacco prices in the EU, with prices almost twice the EU average. They would also like to make people aware that resources are in place to help them kick the habit.‘Tobacco Free Ireland’ outlines the Government’s goal to have a tobacco-free Ireland by 2025.Donal Buggy, Head of Services and Advocacy at the Irish Cancer Society said: “We need to send a strong signal that the Government is serious about reaching its target of a Tobacco Free Ireland by 2025.“To do this we need to follow the example of Australia, where significant spikes in excise duty, next to policies such as plain packaging, have seen a dramatic fall in the smoking rate to 12.8% by the middle of 2016. In Ireland, the smoking rate is just under 20%”Speaking at the British Thoracic Oncology Conference in Dublin recently, Mike Daube, Professor of Health Policy at Curtin University, Western Australia and tobacco expert said, “In Australia, as in Ireland, Big Tobacco is losing battle after battle in the political arena, in the law courts, and in the court of public opinion. “We are described by the tobacco industry as “the darkest market in the world”. Ireland and Australia have taken similar comprehensive approaches to reduce smoking, which remains our largest preventable cause of death and disease.“It’s pleasing to see that the Irish Government has continued to raise taxes on tobacco products as this is the most effective way of ensuring that people quit.“I hope that Ireland, which leads the world on smoke free legislation, will follow Australia’s example on tax and push for even bigger increases in excise duty later this year.”The HSE run Quit.ie is there to help if you’re a smoker and would like some free help to kick the habit. Cigarettes could go up to €30 a packet was last modified: February 5th, 2017 by Elaine McCalligShare this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Reddit (Opens in new window)Click to share on Pocket (Opens in new window)Click to share on Telegram (Opens in new window)Click to share on WhatsApp (Opens in new window)Click to share on Skype (Opens in new window)Click to print (Opens in new window)Tags:cigarettesIrish Cancer SocietySMOKINGlast_img read more

Read More →