The U.S. Federal Reserve began a two-day policy meeting yesterday, it is expected to lower interest rates toward Zero and discuss emergency tools to end the country’s year-long recession. Observers expect the U.S. central bank to lower its target for benchmark overnight rates by at least 50bp to 0.5 percent and state it will deploy quantitative easing measures to restore growth. US industrial production fell 0.6% in November, with manufacturing output shrinking 1.4% to put it 7.3% below its year-ago level. A separate index of manufacturing activity in New York state hit a record low in December. The data offered a fresh sign that an already year-old US recession is deepening underscoreing the need for aggressive and unconventional actions by the central bank’s policy-setting Federal Open Market Committee. Some economists expect U.S. output to shrink at a 6% annual pace or more in the Q4 2008..
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