Honda Chief: Fed Should Cut Rates

ROCHESTER, Mich. (AP) -- Honda's top U.S. executive said Friday the Federal Reserve should cut interest rates to help invigorate the economy.

John Mendel, executive vice president of automobile operations, also predicted that the U.S. auto market will stabilize around 16 million vehicles sold this year because of government and other actions to shore up the troubled housing industry.

"The economy is not in horrible shape," he told a small group of reporters at a technology event for Acura, the automaker's luxury brand, in suburban Detroit. "I mean, the world is not falling apart."

Federal Reserve policymakers meeting in early August acknowledged they might have to take action to ease a growing credit crunch. A cut interest rates charged to banks came 10 days later on Aug. 17, and analysts are looking for a broader rate cut when Chairman Ben Bernanke and his Fed colleagues meet in September.

Automotive forecasting company CSM Worldwide has forecast U.S. auto sales will total 16.2 million in 2007, or 350,000 fewer vehicles than last year. That would be the lowest annual sales level since 1998 and more than 1 million vehicles lower than the peak of 17.3 million in 2000, according to Ward's AutoInfoBank.

Mendel said Honda Motor Co. would stick to its projection of about 3 percent U.S. sales growth this year because it is expecting a sales boost from its new Accord, which is expected to go on sale in mid-September.

Consumers steered clear of car lots this month as they faced rising mortgage payments and some analysts already predict 2007 will be the worst year for U.S. auto sales in nearly a decade.

Honda Motor Co.: