The Federal Reserve will do whatever is necessary to prevent damage to the economy from the credit crunch that has gripped Wall Street, a Fed official said Monday, warning it will take time for financial markets to fully recover from the strains.
Fed Governor Randall Kroszner's remarks came as fears about the credit crunch and a painful housing slump have gripped investors in recent months, causing stocks to nosedive. Wall Street took another sharp plunge -- 366 points -- on Friday. The Dow Jones industrials was up in trading on Monday afternoon, after being down more than 100 points early in the session.
Some economists believe the Fed will lower an important interest rate at the end of a two-day meeting next Wednesday, to help bolster economic activity. But others, citing the economy's resiliency and worries about an inflation flareup, think the Fed will leave rates alone. Oil prices, which had surged to record highs in recent weeks, have eased a bit but are still hovering above $86 a barrel.
Jerry Wright
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