Divided Fed eyes further rate cut as insurance against slump

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WASHINGTON, Dec 9 (AFP): A sharply divided Federal Reserve is widely expected to cut interest rates further at a policy meeting Tuesday to provide insurance against a potential economic downturn, analysts say.
The central bank's Federal Open Market Committee however is likely to see a heated debate as the world's largest economy downshifts from a period of strong growth in the face of a horrific housing slump and tight credit.
Some members are certain to oppose a further cut in the federal funds rate, which is currently at 4.50 per cent after two cuts by the Fed in September and October totalling 75 basis points, or three-quarters of a percentage point.
A concern is whether more cuts would fuel inflation and bring back an "easy money" cycle blamed for the housing market boom-and-bust cycle.
In view of the robust 4.9 per cent growth pace in the third quarter and an expanding labor market, analysts say the decision is a close call.