Federal Reserve Chairman Ben Bernanke said in a speech Thursday that the central bank is prepared to continue lowering interest rates in order to help keep the economy on track.
He also reiterated that the Fed does not believe the economy will slip into a recession this year.
"We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks," Bernanke said...
Wall Street interpreted Bernanke's comments to mean that there is now an increased likelihood the Fed will lower its key federal funds rate by a half percentage point, to 3.75 percent, at the conclusion of its two-day meeting on Jan. 30."
A half-point cut is certainly on the table and it's about time. The Fed has a lot of work to do," said James Glassman, senior economist with JPMorgan Chase.
To that end, investors are pricing in a 92 percent chance that the Fed will lower rates by a half-point on Jan. 30, according to federal funds futures listed on the Chicago Board of Trade.
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