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Weighing pros, cons of Federal Reserve interest rate decision.

Article Excerpt
Global Insight, one of the top international economic forecasting firms, now sets the probability of a recession in the U.S. at 50%. In response, the Federal Reserve Board (FRB) took action in an emergency session January 22 to interest lower rates by more than was expected, 3/4 of a percent.

The lowering of interest rates will be helpful, but is not enough in and of itself to prevent a recession if oil prices remain as high as they are currently and unemployment continues to rise, says Dr. Marianne Hill, senior economist with the Institutions of Higher Learning.

Hill said lower interest rates will encourage both spending and investment in Mississippi and elsewhere in the country, but the positive impact will be difficult to see. "However, the growth rate of the economy would be even lower without this positive intervention by the Fed," Hill said. "Mississippi's growth rate in 2007 exceeded that of the rest of the nation, even though our foreclosure rate is among the highest in the country. Katrina-related spending and new business investment are likely to mean that the state at the least keeps pace with the rest of the country.

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"However, our foreclosure rates are high and rising, and subprime borrowers here will continue to be hit hard. Mississippi has...