Wednesday, September 19, 2007

Corporate chiefs welcome Fed rate cut

The leaders of U.S. companies welcomed the Federal Reserve's move to slash interest rates Tuesday, but one questioned whether it would be enough to revive a faltering economy.

"It will probably stop the bleeding, but the question is whether it will provide the impetus the economy needs," said Bill Zollars, chief executive of YRC Worldwide Inc., North America's largest trucking company.

"Unless we see a dramatic change, I believe we're going to need more (interest rate) cuts."

The Fed's half-percentage-point cut of benchmark rates met the most aggressive expectations on Wall Street as U.S. business struggles with a housing slump, ebbing consumer confidence and turmoil in the debt and equity markets.

CEOs from a range of sectors applauded.

"The more confidence that's coming from them (the Fed), the better. Any of that is good news right now," said James Hyatt, CEO of sandwich shop chain Cosi. "Any time they are getting involved, that's favorable to all of us who are running businesses and trying to chase consumers."

Recreational vehicle company Winnebago Industries also backed the Fed cut.

"Glad to see they dropped it half a percent," said Bruce Hertzke, CEO of the No. 1 U.S. motor home maker. "Think that'll help our business and the economy a little bit more. Should hopefully get things rolling again."

The National Association of Manufacturers, a lobby group for U.S. producers, unequivocally welcomed the cut.

"By lowering interest rates and reducing the cost of capital, today's decision will help boost business investment and keep the expansion on track," said the association's chief economist David Huether. "This is especially good news for durable goods manufacturers who produce capital goods."

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