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Sunday, December 09, 2007

Mortgage Economist Predicts 3rd Interest Rate Cut This Year

The next Federal Open Market Committee (FOMC) meeting of the Federal Reserve will take place on Tuesday, Dec. 11. LendingTree Loans Chief Economist Jim Svinth forecasts a rate decrease of 50 basis points, which is the third interest rate cut for 2007.

Svinth says, "Given the slow motion decline of the housing and financial markets, the Fed will in all likelihood drop the target Fed Funds rate by .50% at the December 11 meeting."

Svinth adds, "The ramifications to the domestic and global economies if the FOMC were to do nothing at next week's meeting are huge. In the same vain, lowering rates by only .25% is simply not enough. Recent comments made by Fed members indicate they understand the current risks and therefore will take further action on Tuesday with a drop of .50%."

A rate cut on Dec. 11 will be the third rate cut for the FOMC following a pause campaign that has been in effect since August 8, 2006.

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