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Federal Reserve slashes US rates

March 18

BBC - The Federal Reserve has cut US interest rates sharply in a bid to restore confidence to nervous financial markets and boost the ailing economy.

The central bank lowered rates to 2.25% from 3%, but the cut was smaller than financial markets had been expecting.

The Fed has taken strong action this week to avert a financial panic after investment bank Bear Stearns was forced into a fire sale to avoid collapse.

Many economists believe the US economy is already in a recession.

US Treasury Secretary Henry Paulson admitted earlier on Wednesday that the US economy was facing a "sharp decline" at the moment, but hoped for a recovery later in the year.

The Fed has lowered rates five times since mid-September in a bid to boost the economy, which is reeling from credit crisis that was triggered by a slump in the US housing market.

"Today's policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity," the Federal Reserve said.


Tina March 18, 2008 - 2:50pm
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( categories: News | Economics: USA )

I wonder

how many underwear changes the FED has gone thru in the last five days?

The markets were expecting more than 3/4%? That's not Helicopter Ben, that's B-52 Ben.

Tim March 18, 2008 - 2:56pm
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At least the reductions come at a faster pace now

Less stops along the way before realizing this won't help.

I did inhale.

Don March 18, 2008 - 3:01pm
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Why the Fed's rate cuts won't help you

MSN

In its efforts to keep irresponsible bankers on Wall Street afloat, the Federal Reserve is spurring inflation, crippling the dollar and cutting into retirees' incomes. And mortgages and car loans won't get any cheaper.

More at the link

I did inhale.

Don March 18, 2008 - 3:06pm
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There's always a silver lining

European companies are really getting hammered by the strong Euro. BMW took a 517 million euro hit last year from the weaker dollar and this year is going to be no different.

Lindt (the chocolatiers) has decided to set up production in the US to combat the strong euro/weak dollar situation. I expect other companies to follow.

Airbus is really taking it in the chin--prices for airliners are quoted in dollars and those contracts inked a couple of years ago for the A380 look a lot less appealing now. Good news for Boeing.

Petronius March 18, 2008 - 3:23pm
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Good article, thanks

Some guys in the press are starting to call this for what it is: a bailout of the bankers at the expense of everybody else.

Numerian March 18, 2008 - 3:34pm
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I'm with Don here...

...but it looks like we all are... these rate reductions are simply band-aids for a symptom, not the cure for the problem. The sooner the Fed drops them to nothing, the sooner they'll see they're wasting time and hurting themselves even more.

or, maybe they're still unconsciously following Grover Norquist's plan...to damage the government and reduce it to the point it can be 'drowned in a bathtub'.

-5.75,-4.05
"We're all fucked. It helps to remember that." --George Carlin

justadood March 18, 2008 - 3:36pm
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HaHa

It's destroying the only part of the government that Grover likes; The money.

Unfortunately for the neocons, they destroyed the government before they destroyed the society. The didn't kill the beast, they only stripped it naked and made it mad.

brodix March 18, 2008 - 5:08pm
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