By Jeff McKinney
The Cincinnati Enquirer

After aggressively slashing interest rates more than expected about a month ago, most experts predict that the Federal Reserve's policy-setting body likely will not change the nation's key interest rate when it meets today.

Many economists say that the Fed's Open Market Committee will leave its benchmark federal funds rate - what banks charge each other for overnight loans - unchanged at 1.25 percent, the lowest level in more than 40 years.

"The half-percentage-point reduction (in early November) was so dramatic, I would absolutely be shocked if they did anything this time around,'' said John Schmitz, director of income strategies at Fifth Third Bank.

Mr. Schmitz, like many other Fed watchers and economists, predicts that the nation's central bank will sit tight for a while to see if its previous rate-cutting efforts will be enough to spur the relatively weak U.S. economy.

The Fed has cut its target rate 12 times, by 5.25 percentage points, over the last 23 months.

"I don't seem them moving for at least another few months. ... They're waiting to see if the earlier cuts will accelerate economic stimulus,'' said George Mokrzan, chief economist at the private financial group at Huntington Bank in Columbus.

Many experts think the Fed will get a key glimpse whether its efforts are working next month, after final retail sales figures come in from the holiday shopping season. They said the Fed will then be able to better gauge if the previous interest-rate cuts were enough to spark consumer spending, particularly with the last higher-than-expected rate reduction.

Consumer spending accounts for 75 percent of the nation's economic activity, directly affecting corporate profits, new business investment and the stock market.

Stuart Hoffman, chief economist at PNC Financial Services Group, said the Fed likely will retain its current outlook, or "bias," - saying the risk between inflation or recession is balanced. "They'll keep the target rate and their bias the same as last month,'' he said. "I don't see them doing anything because they accomplished what they wanted to do in November.''

E-mail jmckinney@enquirer.com