The United States is likely to cut interest rates by a further 50 basis points in the wake of the global recession. Investec Asset Management head of fixed income Paul Griffiths said the US would need to cut rates further, despite having already cut interest rates 10 times this year. 'Terrorist attacks look as though they will tip an already fragile global economy into the first outright recession since the early 1980s,' he said. 'Global leading indicators give few signs of early recovery, although monetary and fiscal stimulus could work surprisingly quickly next year.' He believed the Fed rate would go down to 1.5 per cent and would stay there for about six months. Under the peg-linked system, he said Hong Kong would likely follow any US interest rate move, meaning the SAR would soon see zero interest rates, as the present deposit rate was only 0.25 per cent. Mr Griffiths said Europe was likely to follow the US interest rate cut to boost its economy. He believed the rate cut in Europe would be about 75 basis points. Under such a low interest rate environment, he suggested depositors would likely invest in bond funds or other bond products as prices had been good due to low interest rates. But he warned that investors should take notice that the danger of companies defaulting on payments increased during a recession.