Rate Cut!

Posted by | September 19, 2007 | Current Affairs | No Comments

Well the news that is occupying everybody’s else blog or the article which is being covered in the first page in all the papers will be in my Blog too. Yes it is regarding the Fed’s rate cut, at last it has happend and has set the wall street in an upbeat mood. The stocks as expected did go up, the Dow Jones Industrial average went up by 335.97 percent. By the way the Fed’s decision to slash the rate to almost 50% did raise many an eybrow, contrary to the belief the Fed Rate was cut to 4.75% from 5.25%!

Many did think the rate cut might reflect inability of Fed. to honour its decision to defend the Inflation rate. But many welcomed it saying that though it might not provide a permanent relief, it definetly would lead to more ‘positiveness’ and forestall the adverse effect on the broader economy.

A decline in employment rate in August, showed that the housing related strain were trickling down to Industries and to Household and it was time that Fed. take some charge and forestall some of the negative effect.

As soon as the Fed. reduced the rate, the bank’s followed suite and reduced their Prime Lending Rate in loan to many of their top customers

Yes this might not be a permanent solution to the adverse effect that the economy might face in the future but it definelty would try and forestall some of the effect and bring about a psychological ‘positive’ atttitude in the investors, which might inturn lead to more investments in the economy.

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