The Federal Reserve may soon be forced to cut interest rates again, driving them to the lowest level since Dwight Eisenhower was president, amid fears that the shaky economy is about to fall back into recession.
Concerns about the anemic recovery from the 2001 downturn were heightened with last week's report that unemployment had risen to 5.8 percent in February, with a big loss of 308,000 jobs.
"Prior to the unemployment report, we thought the Fed would stay on hold for some months to come and the next move would be a rate hike, not a rate cut," Louis Crandall, chief economist at Wrightson ICAP, a bond market research firm, said Monday.
Now, Crandall said, he is forecasting a quarter-point rate cut at the March 18 Fed meeting.
The Fed last cut interest rates on Nov. 6, when it slashed its target for the federal funds rate, the interest that banks charge each other on overnight loans, to 1.25 percent, the lowest average since 1.17 percent in July 1961.
The funds rate has not been lower than 1 percent since it averaged 0.68 percent in July 1958, when Dwight Eisenhower was president.