US Central Bank May Cut Key Interest Rate

Some economists surveyed by news organizations say the struggling U.S. economy and easing inflation may prompt top officials of the U.S. central bank to cut interest rates when they meet Tuesday in Washington.

If the U.S. Federal Reserve cuts the key rate, it would make it easier to borrow the money that businesses need to expand and for customers to get mortgage loans to buy homes.

Central bankers around the world say they are worried that the current financial crisis will cause banks to stop lending, which could stall the economy and make the crisis worse. So the Fed and other central banks also have been making more money available to banks to ease their concerns and keep the economy going.

The Fed has been holding its benchmark interest rate steady at two percent, and some economists predict a quarter of a percentage point cut.

While the Fed lowers interest rates to stimulate the economy, it raises them to fight inflation. But worries eased Tuesday, when a report from the Labor Department said overall inflation dropped by one-tenth of a percent in August.