The Wall Street Journal leads page one with a report that the Federal Reserve is considering a halt in its campaign of aggressive rate cuts. While the Fed is likely to trim rates by a quarter-point at its meetings next week, the Journal says it might just hold the line, something the markets are likely to dislike.

The shifting sentiment doesn’t mean the Fed thinks the worst is past for the economy. It is almost certain to signal continued concern about economic growth and a willingness to cut rates further if the outlook worsens.

Still, officials would like to see whether their rate cuts, the Fed’s other steps to lubricate credit markets and imminent tax rebates help produce a second-half recovery.

While the Journal notes that for the first time in months the Fed is meeting while the economy doesn’t appear in danger of falling off the cliff any minute now, some things have worsened since it met last month to slash rates by three-quarters of a point. Employment fell faster than expected, retail sales continue to be soft, and food and energy costs continue to skyrocket. It quotes an analyst saying the last $10 of increase in the price of oil will shave half a point off economic growth.

Still, stocks are up 7 percent and the WSJ says some consumer loan rates are beginning to fall, signaling something of a thaw in credit markets since the Fed backstopped Wall Street by opening lending to it and accepting its junk debt securities as collateral. The Financial Times says concern about a wave of big-bank failures are way down since the Fed’s move five weeks ago.

But the all-important Libor rate, which measures how much banks charge to lend to one another, has spiked in recent days. Bloomberg says some gauges show Libor, already at a seven-week high, still has room to rise on “speculation the global credit crunch prompted lenders to manipulate the rate to prevent their borrowing costs from escalating.” In other words, lying about their loan rates to make things seem better than they really are.

Street shoots self in foot

The Journal has an interesting story on C2 that says so-called revolvers may be the next weapon to backfire on the financial industry.

The paper says companies are beginning to increase their borrowing from revolving lines of credit, which are sort of like corporate credit cards, and that these new loans could be riskier than the leveraged-buyout debt that’s caused so many headaches on Wall Street.

The banks that issued these revolvers to companies can’t just back out of them willy-nilly. In some cases they’re on the hook for seven years at rates the WSJ quotes an analyst saying are “really cheap,” though it doesn’t say how cheap.

It’s usually a bad sign when a company taps its revolver for a large sum since these are typically meant for day-to-day cash-flow management, not to shore up a firm’s longer-term finances.

Rice quotas at Costco

The WSJ, the Los Angeles Times, and The Associated Press all take looks at how the rice crisis is hitting the U.S.: Sam’s Club and Costco are slapping restrictions on how many bags a customer can buy. No word yet on if customers are rioting in aisle four.

The WSJ says on B1 that hoarding is the cause, and it’s driven as much by skyrocketing prices as by fears that rice will run out (some other stores have limited purchases of such staples as flour and oil). The LAT says there is no U.S. shortage—the country exports half of what it produces:

“It is like a run on the bank. We don’t think there is a shortage, it is just increased shopping by customers who think there is,” said Richard Galanti, Costco’s chief financial officer.
The AP says the food runs have been caused by business customers like restaurant owners, and regular grocery stores aren’t seeing the panic.

Meant for each other

It appears Delta and Northwest are collapsing into each other’s arms. The two airlines, which recently agreed to merge, reported big first-quarter losses totaling about $10 billion, though most of that was for non-cash charges to write down goodwill lost over the last year by soaring oil prices. The Journal says on its Marketplace front that before these special items, the losses were a combined $465 million.

Jet fuel prices rose 63 percent from a year ago, says Bloomberg, pulling all the major airlines into the red. The New York Times says on C2 that the airlines need to hang significant price hikes on consumers to return to profitability.

Apple good, coffee bad

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.