Azerbaijan, Baku, 29 April / corr Trend A.Badalova / The US Federal Reserve System (FRS) is likely to cut its rates from 25bp to 2bp in a meeting this week, (Julian Jessop, a senior international economist of Capital Economics Ltd, one of the leading British companies for economic research, said.
The next FRS meeting on 30 April will confirm the rate to be cut. Initially we thought that the FED would be prepared to cut rates by a more substantial 50bp on 30 April, Jessop said.
"The markets still think a 25bp cut this week is pretty much a done deal. However, following this cut they now think it is more likely that rates will rise rather than fall by the end of this year," the British economist said.
However, the FRS will be forced to continue cutting rates aggressively.
"The full severity of the recession has become apparent. So, we remain convinced that the Fed will be forced to continue cutting rates aggressively in the second half," he said.
To prevent the impact of crisis on the mortgage market the FRS cut the rate by 2.25bp a year in September 2008, in an attempt to prevent a sharp slowdown in the growth rate of the US economy.
The correspondent can be contacted at Capital@trend.az