Financial papers say Fed chief ‘panicked’ with rate cut

HONG KONG, Jan 23, 2008 (AFP) – Major newspapers expressed some scepticism on Wednesday about the US Federal Reserve’s hefty 75 basis point cut in interest rates, and said the US central bank looked like it was panicking.

Fed chief Ben Bernanke made the announcement on Tuesday — the first unscheduled cut since just after the September 11 attacks on the United States — even though there was a planned meeting of the Fed just a few days away.

“There is more than a whiff of panic about slashing rates little more than week before a scheduled meeting,” the Economist magazine said in an online editorial.

“The deepening gloom about the economy may well warrant such an aggressive response. But the timing is puzzling,” it said.

“The economic news has not grown any worse in the past few days and, given the time needed before monetary policy affects spending, the added urgency seems odd.”

It said that previous Fed chief Alan Greenspan had not cut rates by more than 50 basis points in one go, even when he was steadily bringing them down.

The Financial Times said the sharp cut was justified but said that Bernanke was running a risk in apparently reacting to the markets, as shares around the world had slu