WASHINGTON (AFX) - Former Federal Reserve board governor Wayne Angell said there could be a further sharp decline in U.S. equity markets if the Federal Open Market Committee only cuts its key federal funds target rate by 50 basis points at its formal meeting on Tuesday.
"I believe a 50 basis point cut in the funds rate Tuesday runs the risk of another significant downturn in the equity market," Angell, now chief economist at Bear Stearns, said in an interview on Fox News.
Asked by how much the Fed should cut interest rates at its meeting on Tuesday, Angell replied, "The safe amount would be a full one percent. I would be pleased by 75 (basis points)," he said. "We're in a slow growth recession," Angell said.
Angell said the Fed would eventually have to cut interest rates from the current 5.5 pct level to around 3.0 pct to spur an economic rebound, if Congress does not expand and amend President George W Bush's 1.6 trln usd tax cut.