The clamour from investment houses for a cut in interest rates in the United States is growing louder by the day, with concern mounting that the unravelling economies of Latin America and Russia may threaten to derail global growth. Many economists believe a US monetary easing is now essential to combat growing deflationary pressures around the world, coupled with calls for decisive action from the Group of Seven leading industrialised nations in Japan and other troubled economies. 'The crisis is itself a product of a stance among the major central banks that has been too tight,' ING Baring analyst Malcolm Roberts said. 'This [a cut of 50 basis points by June next year] is a rational and sustainable move.' The US Federal Open Market Committee, which meets eight times a year to review monetary policy, is next scheduled to assemble on September 29. Observers believe the Federal Reserve, or central bank, could move then, trimming the Federal Funds rate, which has been set at 5.5 per cent since March last year. The upsurge in rate-cut predictions comes on the back of an apparent shift by Fed chairman Alan Greenspan towards a loosening and the continued deterioration of the global economy, especially in Latin America. Deutsche Bank said: 'Fixed-income investors are betting heavily that the Federal Reserve will not only ease soon, but the cumulative reduction in official rates will amount to at least 100 basis points.' Yesterday, the long-bond yield was at 5.22 per cent, having traded below the Fed Funds rate since late last month. On September 8, Mr Greenspan said the 'risks had become balanced' and 'it is just not credible that the United States can remain an oasis of prosperity unaffected by world that it is experiencing greatly increased stress'. Last week, a capital exodus from Latin America gathered pace, the latest region to feel the heat of the spreading financial turmoil. Economists believe slowing global economies are denting growth in the US and providing a basis for Fed action. Latin America and Canada, for example, take 43 per cent of US exports. 'It now appears as if the global economic conflagration has touched everywhere except the US, western Europe and Australia,' Bankers Trust said. 'A US recession is probably the next major 'crisis' that the world economic system has to deal with.' Last year, US gross domestic product grew 3.85 per cent. In the quarter to June 30, that was down to 1.6 per cent and many houses forecast GDP of between 1 and 2 per cent for next year. Analysts pointed out that a negative wealth effect, sparked by the Dow Jones Industrial Average's 16.5 per cent retreat from its record high to last week's close, would also drag on expansion. Inflation, meanwhile, is subdued and trending lower. However, some indicators from the world's largest economy - such as the housing market - remain strong, prompting suggestions that the Fed could cite global conditions as the impetus to reduce credit costs. 'It is hard to make a case today that the Fed should reduce rates for economic reasons, but we could not rule out a rate reduction out of concern over systemic financial risk or to help calm global markets,' Deutsche Bank said. Mr Roberts said Fed action would come, but only after the slowdowns in Russia, Asia and Latin America were more keenly felt in the US and European Union. He said this would probably occur around the end of this year or beyond. 'The global financial implosion looks likely to intensify until the moment that monetary authorities indicate a willingness to take action,' Mr Roberts said.