Moments Ago Fed Funds Rate was cut to down to 1.00% bringing it down 50 basis points. It was expected as 25 basis was too low and 75 basis points were thought as too high.
This new kind of pushed Fed into corner. It is running out of Monetary options. few fiscal tools are left. It is very unlikely that Fed will lower the rates below One Percent. but some sources says that this option is still on tables. we did an article on Zero interest rate a few days back.
We at FLR don’t think that Fed cutting rate will ease the credit market. The current problem is about stinking balance sheets. Govt Bail outs Or Easy Credit from Fed can not do any thing but to inflate them by putting either equity or credit on these balance sheets. It does not take away the stink from the balance sheet. The problem with liquidity of commercial paper will not be solved unless all those toxic assets like sub prime credit are removed from them.
DOW and S&P 500 took a dip after rate cut. and 10 year bond yields rallied upwards….. watch Bloomberg for more details.
Related Posts:
- Japan’s central bank cuts key interest rate to 0.1 percent
- No Change in Interest Rates for the Third Quarter of 2009
- 10 Reasons: Why Fed Should adopt Zero Interest Rate Policy?
- Fed Cuts Short-Term Rates to Nearly Zero
- Posts about Interest Rate as of March 28, 2009
- Posts about Interest Rate as of March 26, 2009
- Posts about Mortgage Rate Outlook as of March 26, 2009
- What FED can do about mortgage rates?
- Common Myths About Mortgage Rates Movement
- Posts about Mortgage Rates as of March 2, 2009
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