HEINDRICK SO

Despite the recent cuts and Bush signing the stimulus plan, costs of borrowing still remain high for households and companies alike. Just to remind, these recent cuts have been the fastest cuts since the feds used rate cuts as principal policy tool in 1990.

“Yesterday, at a closed-door luncheon with Republican senators in Washington, Bernanke was “very upbeat” that the economy would avoid a recession, Iowa Senator Charles Grassley said in an interview.

Kentucky Senator Jim Bunning said in an interview that while Bernanke didn’t comment on interest rates, the Fed chief said that “they have their eye on inflation and price stability, and if the credit crunch didn’t ease, obviously they are going to have to do something about it.’”

I guess we will just have to wait and see.

update : Expect further cut Mid-March

Fed Interest Rate-cut Fails to Lower Borrowing Costs [Bloomberg]

The Fed “will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks,” Bernanke told the Senate Banking Committee.

He acknowledged the outlook for the economy had worsened in recent months and said risks to growth had picked up. His comments reinforced investors’ expectations the central bank would lower interest rates by a half-percentage point at its next meeting on March 18. [Bernanke on Yahoo Finance]