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American Morning

Another Federal Reserve Interest Rate Cut Expected Today

Aired June 27, 2001 - 09:06   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: We turn now to money news at six minutes after the hour. It is decision day for the Federal Reserve policymakers. The guessing game among investors is not whether the Fed is going to cut interest rates today but by how much?

CNN's Tim O'Brien is on the Fed watch for us. He joins us from Washington this morning -- good morning, Tim.

TIM O'BRIEN, CNN CORRESPONDENT: Good morning, Leon.

Alan Greenspan arrived here about 15 minutes ago, and we now understand that the meeting of the Open Market Committee is just about to begin. And you're right, the big mystery is not whether but how much will it be: a quarter of a point or half a point? Seldom have economists and especially Fed watchers been so divided. One can only assume that perhaps at least members of the Open Market Committee are also divided, in which case, yesterday's good economic news could be very decisive.

Yesterday, you'll recall, factory orders for durable goods was up, the new home sales up, consumer confidence, most importantly, up - the highest it's been this year. Those factors could persuade an otherwise divided Open Market Committee to suggest only a quarter percent cut in interest rates. On the other hand, the "R" word is out there, recession is a real threat, earnings warnings abound. It's an open question. We'll know in about five hours. And if it is only a quarter percent cut, one thing you can bank on that is that the Fed will keep its finger on the trigger if more is needed later, it can come very quickly.

HARRIS: All right, good deal. Thanks. Tim O'Brien reporting live in Washington this morning. We'll get back to you, as well, later on.

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