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The Federal Reserve will probably lower its benchmark interest rate in the first quarter of 2007 as slowing economic growth diminishes inflation pressures, according to economists at Citigroup Inc.
The biggest U.S. bank by assets previously forecast the Fed would keep its target rate for overnight loans between banks at 5.25 percent through June. The bank now predicts a quarter-point reduction by March, with the Fed holding the rate at 5 percent through September.
Mounting signs of a slowdown in the U.S. economy spurred Treasuries to their biggest quarterly rally in four years and bolstered investor confidence that the Fed has finished raising rates. The Fed on Aug. 8 halted a two-year campaign of lifting rates, stating that slower growth was likely to damp inflation. |
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