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Doug Krizner: How badly has the subprime mortgage problem spread? Well it’s obviously affected Wall Street and could soon affect Main Street. Some economists are talking recession, and you can bet the Fed will consider this when it meets tomorrow to talk interest rates. Ashley Milne-Tyte has a preview.
Ashley Milne-Tyte: Most economists expect the Fed to keep interest rates unchanged, 5.25 percent. Gus Faucher of Economy.com says the economy is still growing, if slowly.
Gus Faucher: The economy is gonna continue to add jobs at a decent pace, the unemployment rate might move up a little bit, and given all of that we expect the Fed to remain on hold through this year and into 2008 as they continue to see how the situation unfolds.
Joel Naroff is chief economist at Commerce Bank. He says all eyes will be on the guidance the Fed offers along with its rate announcement.
Recently the Fed’s been focused on inflation. Naroff thinks it will soon be just as concerned about economic growth.
Joel Naroff: That balance between growth and inflation could be coming either in the August meeting or the September meeting and that will be an important indication that the Fed is getting ready to possibly cut rates.
He says it would take a major change to the state of the economy to force the Fed’s hand.
In New York, I’m Ashley Milne-Tyte for Marketplace.
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