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That move would free the Fed to cut interest rates below zero.
Economists said what appeared to push the Fed to cut rates by a half point were the dismal job market numbers from August.
They agreed that failure by the Fed to cut rates by at least that much would get a harsh market reception.
In the late summer of 1998 as Russia defaulted on its debt, the bond market's seizures persuaded the Fed to cut rates aggressively.
While Dr. Doom wants the Fed to cut rates by a full percentage point when it meets on Tuesday, Dr. Gloom favors a tax cut for shareholders.
But from his vantage point in Sturgeon Bay, Wis., Mr. Kasriel says he believes the economy will start growing at a rate that should prompt the Fed to cut back its efforts.
Since the credit squeeze began in late July, some on Wall Street have been clamoring for the Fed to cut interest rates and ease the flow of money in the financial system.
Fed funds futures trading on the Chicago Board of Trade Thursday indicate that futures traders expect the Fed to cut rates in September to 5.00% from its current level at 5.25%.
At her confirmation hearing last November she pledged to continue the Fed's $85bn-a-month 85bn-a-month easing (QE) stimulus programme arguing the recovery was still too weak for the Fed to cut support.
Most analysts expect the Fed to cut rates by at least another half-point in the next three months, according to a weekly survey of Fed watchers by Macroeconomic Advisers, a consulting firm in St . Louis
Most economists do not expect the Fed to cut rates any further.
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