Let us take a brief look at the ‘going on’ in U.S. Bernanke has assured the lawmakers that Fed. would support growth and this gave an indication of more interest rate cuts to help the economy. As per Mr. Bernanke’s prediction, the growth is to pick up later in the year, although the outlook of the economy has worsened in the recent months. The central Bank chairman has also reiterated what was felt and said that stronger expansion is expected in the second half of the year.
It is to be noted that Benchmark borrowing cost has been lowered by 2.25% since mid september taking the overnight federal funds rate to 3%. It is a well known fact the reduction rate should not be attributed to immediate relief and would take some time for the effect to be seen. Meanwhile the credit crunch has affected the small business too, as the noose tied around lending money has tightened during the recent months. While many including Greenspan speculate U.S to be on the edge of ‘recession’ we need to really observe if the economy is able to tide over it and in the least show some positive sign later this year.