From the Voice of America, For the second time in just over a week, the U.S. Central Bank has cut interest rates to try to spur a slowing economy. From Washington, VOA's Michael Bowman reports.
US Central Bank Cuts Key Interest Rate by Half Point
Washington
30 January 2008
Last week, the Federal Reserve aggressively cut a key short-term interest rate by 0.75 percent in what was seen as an emergency move to reassure global financial markets that plunged amid worries of a possible U.S. recession. Now, the Fed has acted again, slashing the so-called "federal funds rate" - which banks charge each other on overnight loans - by another half percent to three percent. 
A television screen in a booth at the New York Stock Exchange shows the Fed interest rate decision, 30 Jan 2008
In a statement, the central bank said, given current economic conditions - including a depressed U.S. housing market, a credit crunch, and market volatility - further rate cuts could be forthcoming.
The Fed actions are good news, according to economist Mark Zandi of the credit rating agency Moody's Economy.com:
"With a little bit of luck and some good policy-making - the Federal Reserve is lowering rates - with some fiscal stimulus, we may be able to get out of this [economic situation] without a full-blown, broad-based recession," he said.
Earlier Wednesday, the Commerce Department reported the U.S. economy grew at an anemic 0.6 percent in the last quarter of 2007, for a total expansion of 2.2 percent for the year. That is the lowest growth rate since 2002, when the United States was struggling to recover from a recession made more severe by economic shockwaves resulting from terrorist attacks the previous year.
2 comments:
Do you foresee Malaysia to follow suit in cutting our interest rate? We have maintained our interest rate in the last 14 reviews.
Our currency is stable enough in the money market, thus a lower IR might not be necessary. Moreover, our FDIs, investors etc are in good shape. I was thinking about countries such as Mexico, Canada, Peru etc that have the US as their main trading partner in the export/import market. =)
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