The Federal Reserve on Tuesday went ahead with its plan and slashed interest rates to 3/4 points. The reaction of the economy was good after the rate cut. Infact the global market was up after the news, by the end of the U.S trading the DJIA jumped to 420 points or to a tune of 3.5%, NASDAQ and S&P 500 rose to around 4%. Fed has also assured to those who had expected a further rate cuts that there is room for further rate cuts in the future but those cuts would take into consideration the ‘inflation rate’. Fed has not ruled out about the slowing economic growth in spite of the rate cuts.
The rate cuts have so far given positive response and the market would definitely be on the up with anticipation of further rate cuts. Taking the conditions of the economy the Fed. have promised reducing the borrowing rates in case of need. The Fed.’s as you now have been on a rate cutting spree since September when the economy started slipping down.
The rate cut not only spells good news for the U.S economy but also to the world because the other economies have been acting on cues or signals sent from the U.S economy and this would only help the situation to get better.