Kansas.com: Business
Wall Street advanced Monday as investors undeterred by record oil prices speculated that the Federal Reserve will cut interest rates later this week to boost the slow economy and lure more buyers into the troubled credit markets. The Fed begins its two-day meeting today, and the market widely expects a rate reduction the following day. Central bankers lowered rates by a half-point in September for the first time in four years after the credit markets seized up and posed the threat of recession. The economy has a hard time growing if companies can't borrow and lend money. But with energy prices soaring to new records, the risk of inflation -- which tends to accelerate when rates are low -- may give policymakers some pause. Crude oil futures soared above $93 a barrel for the first time on the New York Mercantile Exchange on Monday after a storm led Mexico's state oil company to suspend about a fifth of its oil production. The Fed remains concerned about inflation but is likely to lower the target federal funds rate by a quarter-point due to overriding credit worries, said Scott Wren, equity strategist for A.G. Edwards & Sons. "It's kind of a psychological sort of move," Wren said. "A 25 basis-point cut isn't going to ease the credit crunch. But it'll give the Fed a little more time to figure out what's going on with the economy."